Stocks as stocking stuffers: Three ideas for kids
Parents have been trying to teach kids about money in clever ways for ages. Take the old standby: allowance. I remember doing chores around the house to earn my weekly allowance as a kid, and now that I鈥檓 an adult those early money lessons have come in handy.
But manual labor isn鈥檛 the only way to get your kids excited about personal finance. You could dress those money lessons up with a ribbon and bow 鈥� or put them in a stocking this Christmas.
Now that you鈥檝e got the idea, let鈥檚 hash out the details鈥�
1. Choosing stocks
When you鈥檙e an adult, any stock that performs well is exciting. Kids聽tend to care more about brands聽they recognize than return on investment 鈥� so when you pick investments for them,聽pick from companies that make or sell what they鈥檙e聽into. RankingTheBrands.com has a list of聽Kids鈥� "Top 100 Most Loved Brands"聽to give you some ideas. For example:
- Your kid loves video games? Nintendo (NTDOY) is a publicly traded company.
- A sports fan? Look into Nike (NKE).
- Love Disney movies? The Walt Disney Company鈥檚 stock (DIS) isn鈥檛 too pricey right now.
- Have an army of Barbies in your house? Think about Mattel (MAT).
- A fan of Happy Meals? McDonald鈥檚 (MCD) could be a good choice.
The bottom line: Whether it is food, a hobby, or a clothing brand, your kid will care a lot more if the company makes something they understand and can聽personally relate to.
2. Where to buy
If you鈥檇 like to start your kid off with a single share of stock, a few companies offer stock starter packages for kids. These companies don鈥檛 have every available stock, but they do offer framed certificates perfect for gift giving.
- One Share My First Stock: Comes with a framed, colorized stock certificate, an owner鈥檚 manual, and an e-book on trading.
- FrameaStock.com: Currently running Christmas specials with discounts on framed stock certificates and shipping.
If you鈥檇 like to order more than one share of stock, or don鈥檛 see the company you wanted listed, you can buy from an online brokerage. In "4 Ways to Invest Without Much Money," we listed a few good online brokerages:
Keep in mind that not all companies give out printed certificates anymore, but you can make your own using a program like Google Docs or Microsoft Publisher.
3. Other options
Stocks aren鈥檛 the only learning gift you can stuff in a stocking this year. There are other ways to help your kid build a nest-egg. For example:
- Fund a small Roth IRA account.聽A Roth IRA account will earn compound interest your kids can use for college or in their retirement years. Use our聽聽tool to find an account with a low opening contribution requirement.
- Start a college savings account.聽It鈥檚 never too early to start saving for college. Open a 529 college savings account for your kid and help them understand how the different potential investments work and potentially compound.
- Buy bonds.聽When you invest in bonds, you loan money to a private company or government agency. The money you loan earns interest, and after the loan matures you get the money back.聽These聽investments may not have the excitement of stocks,聽but they tend to be safer and easier to understand.聽Read more about savings bonds offered by the U.S. government at聽TreasuryDirect.
If you do give the gift of stocks or bonds,聽set up a regular time to sit down with your kids and talk about聽their investments, including how they鈥檙e changing in value and why. The lessons they learn could stick with them for life, and maybe even change their life for the better.
While investments will never have the same cache聽as the toys advertised on TV, they can be exciting. For example, Stacy鈥檚 best-ever investment was Apple 鈥� a stock he bought for about $8 a share a little more than 10 years ago that now sells for more than $500. What kid wouldn鈥檛 be excited by that? And the best part: no batteries or assembly required.
Angela Colley is a writer for聽, a consumer/personal finance TV news feature that airs in about 80 cities as well as around the Web. This column first appeared in Money Talks News.
