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Fool's School Are Your Kids Investing?

Getting your kids to eat vegetables isn't enough. Give them a financial head start by introducing them to investing. With time on their side, they can reap great benefits from the magic of compounded growth. Try playing and experimenting together:

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Getting your kids to eat vegetables isn't enough. Give them a financial head start by introducing them to investing. With time on their side, they can reap great benefits from the magic of compounded growth. Try playing and experimenting together:

(1) Build a mock portfolio. Have your kids list companies that interest them. If they look around their home, classrooms, the mall, and on TV, they'll see firms such as Nike, Microsoft, Coca-Cola, Kraft Foods, Apple, Wal-Mart, McDonald's, Kellogg, Disney, PepsiCo and Johnson & Johnson. Have them list a dozen companies on a sheet of paper, with ticker symbols, current stock prices and the day's date. Every day or week, have them record the latest prices. Calculate the gains or losses regularly. Such short-term stock price movements aren't terribly meaningful, but they can help a child understand how the market works. (Set up an online portfolio, perhaps at http://finance.yahoo.com, and tracking your holdings will be a snap.)

(2) Follow the companies together - you'll find some news reports at http://caps.fool.com. Watch the companies expand internationally, add stores, announce new products or services, report quarterly sales and earnings, and discuss their strategies. Read through their Web sites and annual reports. Note how news affects stock prices.

(3) Eventually, help your child actually invest. You can open a custodial brokerage account, with you acting as the overseer. Or informally "sell" some of your own shares to your child. If you own shares of PepsiCo, you can sell a few to your child at its current price. If you're about to buy 100 shares of Google and your child wants to buy a share or two, you can buy 101 or 102 shares. Once your child turns 18, she can open her own brokerage account.

Help your kids get started. Your teens (and clever pre-teens) can learn more at www.teenanalyst.com, www.brassmagazine.com and www.Fool.com/teens, or in our book, The Motley Fool Investment Guide for Teens: 8 Steps to Having More Money Than Your Parents Ever Dreamed Of by David and Tom Gardner with Selena Maranjian (Fireside, $15).

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