Wealthy Leaders in Financial Advice for Kids: Investments, Budgets, and Inheritance

Entrepreneur Eric Malka had to completely change his way of thinking when he sold his company and became an investor. Since then, she has learned many lessons that she now passes on to her children.

When they bought The Art of Shaving – founded by Malka and his wife Myriam Zaoui in 1996. Procter & Gamble because A reported $60 million In 2009, Malka realized that she had to educate herself.

“When an entrepreneur like me is lucky enough to have a liquidity event, then … we’re dealing with it without proper asset management training,” he told CNBC via video call. While investors need to be patient and focus on long-term returns, company founders often look at a short-term plan, an “almost opposite” mindset, Malka said.

He took courses in wealth management, read books on investing and now has a diversified portfolio of stocks, bonds, private equity and real estate, with about 10% allocated to risky investments. In 2014 he founded the private equity fund Strategic Brand Investments.

When it comes to educating her children—sons aged 14 and 16—about money, Malka’s approach has been to help them learn from the ground up.

“One of the challenges I had with my teenagers early on is that they think it’s really easy to make money through social media and what they hear from their friends,” he said. His eldest son believed he could generate a 20% return every month, which Malka said was “very worrying”. So Malka let him invest a small part of his savings, hoping it would give him an opportunity to learn, and his son lost 40% of that investment after trading currency futures.

“I hate to set my kid up for failure, but sometimes, you know, the lessons learned when you lose are more valuable than when you succeed,” Malka said.

It’s a point Gregory Van, CEO of Singapore-based wealth platform Endowus, agrees on. He and his wife have children aged eight, six and three. He said it will teach them that it is important to make mistakes when the stakes seem high, even if in reality they are small. “The emotional muscle and humility needed to be a good investor is something people have to develop on their own,” he said.

She and her husband allocated a “low-risk” amount of money to each of their three middle-school-aged children to select companies for them to invest in. “Our children chose it. the apple, Amazon, google and Alibaba. All but one of them had tremendous runs. As long as they kept their money in the market and remained thoughtful in their approach, we added to their nest egg every year,” he told CNBC via email.

Olarte de Kanavos said his experience in real estate investing taught him the value of patience. “It influenced my business approach by emphasizing long-term strategy over quick profits,” he said. The mother of three has described her investments in the stock market as “very conservative” to best manage the high risks we take in our real estate business.

She suggested explaining to kids why they want to buy certain stocks because “it can demystify investing and make it an exciting and integral part of their education,” she said.

Van said he talks to his kids about the tradeoffs of investing on their own terms. “I ask them, ‘If we invest this $100 and it goes down by $70 next year, how are you going to feel?’ “Do you want to spend $100 on a toy today, or do you want to turn it into $200 in 10 years when you’re 16?” Van told CNBC via email. “Surprisingly, they are very rational and always go for delayed gratification,” he said.

Van and his wife have investment portfolios for their children, mostly made up of gifts they have received during holidays such as Chinese New Year. “With a long investment horizon, they’re into very diversified, multi-manager, low-cost stock portfolios,” said Van, who shows his children the performance of their portfolios — positive or negative — whenever they ask.