Once your kids have firmly grasped the concept of saving money, it is time to teach them how they can invest it. Explain that when you invest in stocks, bonds or mutual funds, over time your money can grow much faster than in a savings account. Of course, as the market has proven lately, the value of your stock portfolio can decrease as well.

Investing in higher-return securities usually requires you to assume somewhat greater risk. With bank deposits, your money is federally insured up to $100,000. But when you invest in a company's stock, if that company falters you could end up with just a few cents on each dollar you invested. If the company soars, so may your investment. That's why smart investors do their homework first.

Explain to your kids that owning a share of stock means owning a small piece of a company. The value of that share depends on many factors, including how well the company is managed, demand for its products or services, and even emotions, such as how confident consumers are about the economy.

Not all kids will be interested in the stock market, and not all parents feel knowledgeable enough about the market to guide their children. But here are two key rules:

Rule 1: Learn together! Discuss your own investments with your kids, explaining why you made certain choices and how they have performed. When hearing about a company in the news, discuss how events (such as mergers and new products) might affect the stock price, and track that price in your daily newspaper or on the Internet.

Rule 2: Don't force kids into learning about investing. If they aren't interested now, you can try again in six months.

If your children are ready, introduce them to public companies that make products they have an interest in. If your kids are sports nuts, explain they can own a small piece of Nike or even the Boston Celtics.

Before your children take their hard-saved cash to Wall Street, consider practicing with one of the many online stock market games (such as www.virtualstockexchange.com or http://library.thinkquest.org/3096/). Many of these sites provide tools for researching companies and tracking the ups and downs of the stocks you choose.

When you are ready for prime time, investigate the businesses you consider. Get a copy of a company's annual report, either from its investor relations department or a broker. Younger kids might not understand the performance measures inside, but they will enjoy flipping through the photos of the company's products, facilities and leaders.

If picking individual companies is too intimidating, don't worry. Your kids can do what millions of other people do: invest through mutual funds, pools of stocks selected by experienced, knowledgeable managers.

Whether via stocks, mutual funds or other investment vehicles, kids have an edge when it comes to investing: a long time frame to let their money grow. The more important step is the first step - and you can be the one to get them started.