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I'm teaching my kids (<10 yo) basics of investment. We're starting with picking and buying a couple individual shares of stock and then tracking performance for a few months.

Question - does anyone know of any companies that issue kid-friendly investment materials that we could flip through? I don't need them to understand details - but at least pictures of goofy on the prospectus to keep them interested while I point out different sections.

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Well said. My parents taught me the value of money by making sure how hard it is to make money. They taught me that if I... (more)

docjoo (Aug. 13, 2017 @ 11:53p) |

Our daughter's been buy and hold on PG with $1000 of baby gift money for 15+ years.

As an investment, it's been lukewarm... (more)

adverlicious (Aug. 15, 2017 @ 11:45p) |

Probability may want to diversify and get some COST shares. It's hard for a giant companies like PG to grow, but COST ha... (more)

docjoo (Aug. 16, 2017 @ 6:16p) |

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Evilmagus said:    I don't need them to understand details - but at least pictures of goofy on the prospectus to keep them interested while I point out different sections.
  I'd use that trash can guy from sesame street , since that's where most people throw the prospectus

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They had "stock picking" contests when I was in school a couple decades ago... I beat the entire school, and was tops in the state by betting all my fake money on Lucent.
Had i bought and held, I would have seen 99% of my money lost, except for a couple shares of Alcatel, now Nokia.
If you're not careful, your more likely to teach them about hype then about fundamentals, and a significant loss could sour them for life.

The only major value pouring over annual reports and prospectuses would offer is accounting/valuation methods.
Personally, I would start out with history books, "The Gold Ring" by Ackerman about trying to corner the gold market during the Grant Administration is written in a hilarious manner, but more for teens.
They were much less financially sophisticated in the 1800's. and America was a third world country then, so it is kind of easier then modern finance. From the book: "He who sells what isn't his'n, must buy it back or go to pris'n"
I'd also get some some financial literacy info, buy them some index funds and call it a day.

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Secret Millionaire's club - starring Warren Buffet.

https://www.youtube.com/user/SecretMillionaires 

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Other than the stock market, what about investing in:

- Leading a healthy lifestyle with good nutrition choices and staying active?
- The importance of education, whether it's traditional education or picking up new hobbies?
- Financial responsibility by saving/investing a good portion of their income (granted, they're not working yet, but to my next bullet point...)
- A mindset which rewards them financially for solving problems or doing chores around the house?

I'm not sure if investment fundamentals are suitable for a child at such a young age, but you can prepare them to have the ability to learn them once they start to have a grasp of money and such. At that time, there are plenty of literature available for beginning investors.

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Geez, they're under 10 years old, let them be kids. If they show any interest in investments, ok, but otherwise wait until high school. Might as well get them started on coffee and booze too?

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@puddonhead - that's awesome thanks.  We listened to Warren's autobiography in the car this year, and my kids are super excited about him (Jack Welch too!)

@ Thomas Paine - yes, I'm a boglehead - passive mutual fund indexes all the way, but first need to understand the foundations of what a stock is. And it's a lot more engaging to a child to actually follow what happens with a single stock as opposed to some broad spectrum index. That exercise in high school served a great purpose - it taught you fundamentals. Kids this age aren't interested in history of stock market ... they're reading Harry Potter!

@ RussellJohnson - All of those items already done. On to investing

@ Atikovi - raise your kids the way you want to raise your kids, don't tell me how to raise mine.

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I personally know lots of people that "invest" that can't manage a simple household budget. I don't know when their parents started talking to them about "investing," but they definitely didn't do anything to teach them how to budget. If my children asked me about investment advice, I would want to make sure that they not only understand budgeting, but could actually do it in practice before I got into more complicated stuff. The last thing you want is your kids gambling in the stock market with money they need to pay the bills. I'd also be worried about what ThomasPaine said - a significant loss could turn them off from investing or, on the flip side, a significant gain could lead them to make future stock buying decisions that are way too risky.

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I owned real stock in worldcom when I was ?14 or so- maybe younger. I bought it when it was a small company (LDDS), made a few hundred percent on it, sold some of it, then held onto the rest as the company went into fraud/backruptcy.

I don't think 90% of adults, including shareholders, could read a prospectus. Of the 10% who can, 0.1% do. I think going over the basics of stock fundamentals is a good idea, but frankly right now so many companies aren't reading the books (TSLA). Also, I didn't learn the right lesson as a kid- that for almost all adults individual stock selection is the same as going to vegas.

The important kid lesson to teach your kid is the value of money. Make your kid work for the money (cut grass, trash, laundry etc) and give them a checking account, and teach them how to safely and reliably invest. Maybe let them dabble in real investments but individual stock picking isn't the right lesson for a kid. Is was the wrong lesson for me.

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I feel like budgeting is more appropriate for a <10 year old. Give them an allowance and teach them to save some of it, spend some of it, and donate some of it.

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Kevo171 said:   I feel like budgeting is more appropriate for a <10 year old. Give them an allowance and teach them to save some of it, spend some of it, and donate some of it.
  this.  Then mght want to start with compounding , and dividends vs growth . 

edit: can also discuss how to itemize the donation , and the standard deduction

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Investopedia has great videos that are animated, short, and easy to understand.

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when I was around 10 to 13 years old my dad let me invest my college fund how I wanted, I bought intc in the late mid to late 90s about 8k-10k worth, I remember it split and went up and ended up being like 50k to 70k when we finally sold after I went to college. I didn't end up getting to keep the balance lol

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I think looking up free research reports that are offered by the brokers might be a better way to teach the kids on what are the things the company is being evaluated on - e.g. PE relative to other companies and so on. Nice 2-pager versus the "brain washy" investor material.

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BTW - I think the 1st stock that a kid should own is DIS. 2nd might be YUM.

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imho, algorithms and high speed automated trading (not to mention modern accounting tricks, modern moral vacitude, and not-so-modern corruption) have made it literally impossible for a person to profit in individual stocks by skill...  only by luck...

I think that you're effectively trying to teach what the rules used to be, not what they currently are (thus making it a fairly pointless lesson unless taken as a history lesson).

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skarydrunkguy said:   imho, algorithms and high speed automated trading (not to mention modern accounting tricks, modern moral vacitude, and not-so-modern corruption) have made it literally impossible for a person to profit in individual stocks by skill...  only by luck...

I think that you're effectively trying to teach what the rules used to be, not what they currently are (thus making it a fairly pointless lesson unless taken as a history lesson).


These things increase short term volatility. Long term - 20-30 years or more, these secondary market activities are going to be a wash.

So if you invest based on fundamentals, for a 20/30 years+ time horizon, then don't worry about all these secondary market stuff - just the quality of the underlying business.

If you have shorter time horizon, then you are a trader, not investor. The playing field for traders has just become a lot tougher in recent years with the HFT and stuff - and unless you have a few millions to put your server in the same farm where the exchange servers reside.
If you don't - then you don't belong in that arena

I don't belong there - in the trading arena. So I don't play that game.

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I completely agree with puddonhead, and I'd say that even with a shorter horizon of 5-10 years, you can ignore the HFT traders entirely. Their goal is to see a statistical deviation from the norm, get in, make 1 penny profit per share and get right back out within milliseconds. If you're buying as an investment, that's not even a blip on your radar.

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Monopoly. Invest in those hotels on Boardwalk.

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The best financial education you can give to your son is to tell him to make sure to wear a jimmy hat.

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wp746911 said:   The important kid lesson to teach your kid is the value of money. Make your kid work for the money (cut grass, trash, laundry etc) and give them a checking account, and teach them how to safely and reliably invest. Maybe let them dabble in real investments but individual stock picking isn't the right lesson for a kid. Is was the wrong lesson for me.
  Well said. My parents taught me the value of money by making sure how hard it is to make money. They taught me that if I don't want to spend the rest of my life doing a hard labor, I better study hard and do well in school. I saved every dollar I earned from mowing grass and recycling newspapers. I put that money into savings account. Later I learned about money market and CD. I saw how saving money can grow if I saved money. Soon after I graduated from college, I bought my first DRIP stock. I was told Exxon was a very good dividend stock to own for the rest of my life. 2 years later, I decided to take a risk and sell half of my Exxon shares and buy high flying Yahoo stock. I saw Yahoo Sky rocket and split many times. My $9,000 investment eventually became worth more than $400k in less than 2 years. But I learned a hard lesson and saw my unrealized gain of $400k crashing back down to $40k when internet bubble popped. So would I want to teach individual stock picking to my children? Definitely would not. It's very risky and even good investors can loss it all.

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Our daughter's been buy and hold on PG with $1000 of baby gift money for 15+ years.

As an investment, it's been lukewarm. But, we've used it to learn about brands, marketing, P&L's, M&A, retailing, shareholders, governance, etc.

Everyone knows PG brands and they're friendly to shareholders. Look around your home ... Tide, Pampers, Always, Crest, Olay, etc.

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adverlicious said:   Our daughter's been buy and hold on PG with $1000 of baby gift money for 15+ years.

As an investment, it's been lukewarm. But, we've used it to learn about brands, marketing, P&L's, M&A, retailing, shareholders, governance, etc.

Everyone knows PG brands and they're friendly to shareholders. Look around your home ... Tide, Pampers, Always, Crest, Olay, etc.

  Probability may want to diversify and get some COST shares. It's hard for a giant companies like PG to grow, but COST has more growth and innovative way to make profits.

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