I was thinking about this question for the past few months, can an 8 year old invest money better than an adult, and I realized that they are way better for one main reason, THEY DID NOT GET MESSED UP WITH THE FINANCIAL EDUCATION!!!
I will talk in more details about this theory of mine but please take a look and think about the following points:
1- Children and Adults are deferent in the way they think about money: children think of money as an instrument to purchase goods and services (if you give a child some money he will run to buy candy with it), while adults think of money as insurance, guarantee, ambition… This way of thinking changes all the investment theories that we learned and are used. 2- Children use diversification more than us adults (they will use there money to buy cheep candy than buying a few expensive one). 3- Children understand the fee structure of funds more than us (if you tell a child that you will give him either: SAR 10 and will take SAR 2 for transportation fees to the grocery or you will give him SAR 20 but you will take SAR 10 for transportation fees to the grocery, I am sure he will chose the first one because it is less in fees. 4- They are less emotionally connected to there investments (They will sell them as soon as they start losing from them), just like when a new game comes they want it and they through the old one. 5- They buy things when the market is bad while adults are afraid and just look around. 6- They sell things when the markets are doing well while adults hold because of greed for more profit.
I will come back to all of you with my thoughts on each of these points and more.
______________ Minds are like parachutes They only work when open!!! Think out side the box