How to Explain Investing to a Fifth Grader – And Why It Matters

By Fikile Mbhokota, CEO of Satrix

The other day, I overheard my daughter explaining compound interest most brilliantly:

“Your money has money babies. Then those babies have more money babies. And they have more money babies. The longer you leave your money, the more money babies you get.”

She’s not yet in fifth grade, but she gets it.

And that’s the point: investing isn’t too complicated for kids. It’s often the way we explain it that makes it difficult.

In my home, money isn’t a taboo subject. My children are immersed in the conversation through everyday life. My daughter often listens in as I prepare presentations about women, wealth creation, and investing. Sometimes she repeats my words, other times she transforms them — like turning compound interest into “money babies.”

This is how financial literacy should begin: with immersion, curiosity, and stories children understand.

Fikile’s Money Dictionary for Fifth Graders

1. Investing

Think of planting an apple seed. At first, nothing seems to happen. But if you water it and give it time, it grows into a tree — and that tree gives you apples every year.

Investing is planting your money so it grows and gives you more money later.

• Example: Put R100 into an investment. If it grows by 10% in a year, you’ll have R110. The next year, another 10% growth takes you to R121 — without adding more money.
• Activity: Plant a seed in a pot. Water it daily. Just like a plant, money needs care and patience to grow.

2. Compound Interest

Your money has money babies. Then those babies have babies, and they keep multiplying. The longer you keep your money invested, the more babies it has.

• Example: Start with R50. After a year at 10% growth, you have R55. The following year, interest is earned on R55, making it R60.50. The growth snowballs from there.
• Activity: Stack LEGO bricks. Start with one, then add two, then three, then four. The tower grows taller — just like money compounds.

3. Delayed Gratification

This means choosing to wait for something bigger instead of spending right away. Like saving for a bicycle instead of buying sweets today.

• Activity: Create a savings jar for a special toy. Add small amounts weekly, track progress, and celebrate when you reach the goal.

Why Financial Literacy Should Start Early

Teaching investing early isn’t about turning kids into financial experts. It’s about shaping a mindset of patience, planning, and growth. Like brushing teeth, these lessons stick through consistency and daily practice.

In South Africa, we face a culture of instant gratification. Gambling is booming — with R1.1 trillion spent on gambling in 2024, a 40% jump in just a year. Debt is rising, and our savings rate is among the lowest globally. Without financial education, young people risk cycles of debt rather than cycles of growth.

That’s why compound interest and long-term investing should be taught in primary schools. Children must understand not only the power of saving but also the danger of debt — because debt has “money babies” too.

Start Growing “Money Babies” Together

At home, I’ve opened SatrixNOW investment accounts for my children. We check together to see how their money has grown. They see their “money babies” in action, which builds trust and excitement.

If we can educate a generation to understand compound interest before they sign a loan or swipe a credit card, we’ll empower them for life, helping them to save more and invest wisely. Investment fuels growth. Growth creates jobs and prosperity.

The change starts at home — with conversations, with modelling behaviour, and with teaching children to plant their own money trees.