How to Invest in Stocks for Kids
Invest in stocks for kids by opening an account in your name for their benefit and buying the stocks of companies that they might use. Subscribe to the Wall Street Journal to help kids learn about stocks with advice from a financial consultant in this free video on investments.
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Have you ever started to think about how you're going to get your kids interested in the stock market? Well one of the easy ways to do that is to buy stock for them in companies that they might use products for. For instance, did your son or daughter eat Gerber baby food? Do your kids eat Kellogg's Cornflakes? Do they use Microsoft products? And for very fun things, do they use Crayola Crayons or Bic pens or go down the list, what car do you drive? Maybe that's another example. Physically how do you buy stock for them? Well you probably don't want that child even if they're over 18 to have the right to take money out of any account that you open for them. So you open an account in your name for the benefit of them. And then you can share with them the details of what you've been buying and selling, whether it's gone up or down and the lessons that are associated with why you bought that stock, why you sold that stock and the commission part of it so they really get a complete picture over what's happening. So one other thing to think about is how do you turn kids on to stock? Now that sounds pretty strange because a 10 or 11 or 12 year old running around probably isn't thinking about whether the value of their stock portfolio's going up or down, but easy ways to do it, get a copy of the Wall Street Journal, subscribe to it and have it delivered to your house and make it available for them to read the newspaper. Same with parents, maybe leave websites up that talk about stocks or bonds. If you know corporate managers that are very gifted and can speak directly to kids, maybe Warren Buffet for one, you can pull their websites and just leave it run so that the kids hear what they're saying. Like all kids, they're not going to want to admit that they're learning anything from you, but we all know that they really do. In theory kids with a very long investment time horizon can handle more volatility in the stock side in the investment side of their portfolio so that's something to consider. If that's true, then perhaps you can own a company that goes up or down more but grows at a faster clip on an annual basis because if they're 10 years old and they're investment time frame is 50 years or 60 years, they got plenty of time to wait. I'm Roger Groh at Groh Asset and thank you very much for spending time with me.