Obviously, there's a lot to explain when it comes to investing, from the various investment opportunities - stocks, bonds, mutual funds, certificates-of-deposit - to ideas like asset allocation, diversification and risk tolerance. It's confusing for many adults, much less teens. As a first step, I urge you to explain to your kids that they possess an incredibly valuable and easy-to-use asset: time.

Here's an example: If your 18-year-old daughter could invest $1,000 a year in a traditional IRA (in which taxes are deferred until withdrawal), and she earns an average annual return of 8 percent, her retirement account would be worth more than $328,000 by the time she turned 60. That's with $42,000 down. Now that's a pretty dramatic demonstration of the power of compounding growth, and a good reason to start early.

The outcome is even better for some 401(k) plans when you consider that many companies offer a "match." Let's say your 22-year-old son is about to start his first job, which pays a salary of $30,000 a year. The company offers a 401(k) plan that enables him to save, pretax, a percentage of his income (the federal ceiling for 2008 is $15,500) and will match up to 5 percent of his savings at the rate of $.50 on the dollar. Say he is willing to divert 5 percent of pretax income into the 401(k) to get the full company match.

The math works like this: 5 percent of $30,000 is $1,500 per year. His employer matches that with another $750 (50 percent of $1,500), so his annual investment totals $2,250. That's a good start made even better by the fact that the investment is tax-deferred, which at a 15 percent marginal rate, could make the net cost of the investment just $1,275.

IT'S UP TO YOU

If your head is spinning, don't worry. The important thing is to know the advantages of tax-deferred accounts and the benefits of starting early. It's never too soon to get your kids started thinking about the future.

It can be hard, sometimes, to imagine a teenager actually listening to your advice; however, believe it or not, your kids want to know. When it comes to the challenge and the opportunity of building wealth, you can have a huge impact on your children's future. Sit them down and see how easy it can be to have such a difficult talk.