Last November in my blog, Little Wolves of Wall Street, my wife and I introduced our boys into the world of investing. Since then I have told them to think about some of their favorite things. From restaurants to food to electronics to household items, I had them tell me what they enjoyed most in their own little magical world.
Some of the things they mentioned were Minute Maid Lemonade, the Tahoe, Marvel movies, Sony PlayStation, Disney Channel and their iPads, just to name a few. After they mentioned their favorite products, we researched those products and associated the products with the company that produced them. Then my sons and I looked those companies up on Fidelity.com to find the ticker and we read about the financial information of the companies. This was a little too much for my 10 year old, but my 12 year old was able to gain a very, very basic fundamental understanding of investing.
Moreover, although my boys achieved different levels of understanding, they both understood the most basic premise and that was for them to start investing now. My boys have a brokerage account in our account. I allow my oldest son to select and purchase approximately one share (sometimes two, depending on the cost) of stock every month for him and his brother.
So far, their portfolio contrives of the following:
Please understand that I am not stating every child should engage in the stock market. You have to determine if your child has a proper understanding and as the parent, you should definitely have a very solid foundation on how to invest because there are risks. The important thing is to explain to them the fundamentals of investing and saving. In addition, you have to recognize that investing is something that pays off in the future. It's difficult for kids to see that far down the road and that is why you really have to stress to your kids that what they are doing now is for when they are in their thirties and forties.
There are plenty of books like The Little Red Hen for younger kids and for teens, The Motley Fool Investment Guide for Teens: 8 Steps to Having More Money Than Your Parents Ever Dreamed Of. Will it make them an investment mastermind? Possibly, but at the very least they will be on the right path.