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Get Kids Excited About Investing

buy stocks with low comissionsKids all have their own personalities, but most of the time, they follow what they know. That means if parents yell, scream, and create drama, so do kids. If parents are laid back and open minded, their kids generally see the world with a broader view. While, you can change behaviors as an adult, its much easier to imbed good habits at an early age. In our house, financial literacy is one of the habits we’re trying to cement during the formative years. It’s important to teach kids about wants vs needs, plus how to spend and save responsibly. Recently, we’ve found that its also easy to get kids excited about investing!

An Easy, Cheap Way Kids Can Invest in Stocks

I am a big fan of some of the new types of brokerages that make investing less expensive and easy to understand. With Motif Investing, I think we’ve found the medium where small time investors can buy stocks without losing a big chunk of money to fees.

With Motif, you can choose up to 30 stocks in a pre-selected bundle called a Motif, or you can build your own. The minimum buy in is only $250, and each trade is only $9.95. Yes, you can own up to 30 stocks for only $9.95! I know it sounds like an infomercial, but really, for the low, low, cost of $9.95, you can buy 30 stocks!

Even with other low cost brokerages, to choose and purchase 30 individual stocks would cost at least $120 in trading fees if you assume $4 per trade.

I would never invest my money and lose almost half to fees, but with Motif, you don’t have to.

Do Kids Have $250?

Yes, absolutely. Kiddos can be rich because they have no expenses. Just in the last year, my daughter has racked up $300 in birthday, holiday, and allowance money. We started a junior savings account, but the interest is paltry.

I don’t think parents should completely control their kids’ money. Wanting silly things if just part of being a kid and it’s important to let kids have some freedom with spending. Luckily, the things our daughter wants to buy right now are cheap, so keeping $40 of her stash in liquid cash is more than enough. We can easily invest $250.

Kids Can Understand the Stock Market (Sort Of)

I don’t really understand all the intricacies of the stock market myself, but I know enough to be a smart investor. It’s also easy to talk about the stock market with kids. Even our 7 year old sort of understands how companies work. When I told my daughter we were going to divert $250 of her savings into the stock market, she had lots of questions, but was really excited once we got started.

Look at Products They Know

I tried to explain to my daughter that big companies sell parts of themselves for anyone to buy. When we do buy those companies and they make money, so do we. They can also lose money, so we should pick good companies that have been around for a while. I kind of got the blank stare, but then I told her to think about all the products and services she enjoys.

We started with toys and came up with Mattel for American Girl Dolls and Hasbro for My Little Pony. Then came McDonald’s and Pepsi, not for soda, but because they make oatmeal! (Child seriously loves oatmeal) Madagascar is probably her favorite move, so we picked Dreamworks. We chose Southwest Airlines and Hilton Hotels because we like to go on trips, and Procter and Gamble for their fancy nail polish. We also could not leave out Walt Disney. Who doesn’t want to own a little piece of Elsa?

By the time we were done, this was our complete list.

  • Jack In The Box
  • Procter & Gamble
  • Unilever
  • Hasbro
  • Mattel
  • Kroger
  • Whole Foods
  • Expedia
  • Hershey
  • Walt Disney
  • Target
  • Amazon
  • Netflix
  • Children’s Place
  • Dick’s Sporting Goods
  • Kraft
  • Papa Murphy’s
  • Southwest Airlines
  • Kellogg
  • Campbell’s
  • TJ Maxx
  • Google
  • Yum Foods
  • Dollar Tree
  • Scholastic Corp
  • Pepsico
  • McDonald’s
  • Dreamworks
  • Hawaiian Holdings

Stock Mogul In The Making

We made up our little Motif and paid the $250 plus $9.95 for the trade fee. Now my daughter owns stock in her favorite companies. I kind of thought maybe it was a fun exercise that would be soon forgotten, but now I’m not so sure.

I hate fast food as a general rule, but I’ve really dropped the ball lately in household maintenance because of Jim being gone, rental renovations, and having to car shop. I decided a happy meal was in order after my kid patiently sat through a very boring meeting with our contractor.

On the way home, she kind of got quiet, which is rare, and then says, “Mom, tell me again how those stock things work.”

I explained how our buying one happy meal didn’t do much to her stock, but when people buy lots of happy meals around the world, she makes money. Pretty cool, huh?

Motif Is A Great Way To Get Kids Excited About Investing

I think Motif offers a great way to introduce kids to stock investing. I’m not sure we’re ready to talk about broad spectrum index funds, but we do understand McDonalds. If we are able to add $250 a year at 8% interest, that adds up to over $4000 by the time she’s 18, a far greater investment than toys or gadgets. We will also be able to watch the ups and downs of the stock market.

This is fun money that doesn’t cost us a cent. If we go up great, if we go down, that’s OK too. Hopefully by doing this now,  it won’t be scary when she really has to invest for her future.

If you’d like to invest in Motif, you can sign up through my link. I do receive a small commission that I promise will not be used to purchase Happy Meals!

Will you talk to your kids about the stock market? How old were you when you bought your first stock?

 

Image: Freedigitalphotos.net/Miles

 

 

About Kim Parr

Kim Parr is a private practice optometrist, freelance writer, and personal financial blogger. You can follow her journey to 20/20 financial vision at Eyes on the Dollar.

24 comments

  1. I think its awesome to get your kids as comfortable and familiar with money as possible, especially when it comes to the investing side of things. My son was already starting to ask questions about how stocks work at age 9; mostly because he hears me talking to my wife about this kind of stuff. I was actually planning to do more stock related things once they became teenagers and could get jobs.

    • I probably do talk too much about stocks and retirement, but I guess that’s a good think if it opens a conversation.

  2. MomofTwoPreciousGirls

    Just curious, when picking did you discuss the financial merits of each choice? Like were there companies you looked at but decided against? Or did you purely let her pick according to things she knows and spends on anyway? I’m in financial services but have no clue how to explain it simply to my kids!! They each have a share of Disney we bought from oneshare.com when they were born, and we put into their 529 plans. I would like to get them involved though.
    I remember when my sister turned 8 I bought her 5 shares of Disney. I explained that meant she owned a little of the company. Her VERY serious reply was “I’m only 8 years old, I do not have any idea how to run a company”!

    • I just let her choose pretty much whatever she likes and didn’t get very technical. I think she might understand better than some kids about business because I owned my own practice for years and she know that when people buy glasses and get eye exams, I made money. The only stock I kind of talked her out of was Barnes and Noble. She loves books, but I didn’t think that was a great stock for long term. We picked Scholastic and Amazon instead. The other thing I did was tell her we were keeping $40 in her savings account to use for current things she wants to buy. I think she understand that the rest is invested for a long time and might buy a car or help her in college someday. $40 seems like a ton of money, so she isn’t missing the rest. Best of luck with your kids.

  3. What a great idea Kim to use something like Motif for this! We’ve not started with our kiddos yet, but likely will very soon with our oldest and think the going with what they know approach is a good one. I also didn’t realize Pepsi made oatmeal – that’s a staple in our house!

    • I did not know Quaker oats was held by Pepsi. We found all kinds of good information about who makes what. The only company she wanted that is not traded on the stock exchange was Hobby Lobby. If it ever goes public, we’re all over that one!

  4. I think starting kids out on products they know and get excited about is essential. I remember an adult trying to explain the market to me and totally tuning out because they weren’t connecting it to anything I knew and loved.

    • i’m 41, and I still tend to buy things I know and like or I pick simple index funds. I think my eyes would glaze over if I tried to analyze companies I know nothing about.

  5. We’ve had some real basic discussions with our kids about what investing is. I’ll probably go more in-depth when they get to be 15ish. It’s really exciting to see kids begin to ask questions about financial matters. My oldest daughter will be working a bit this summer and this morning she asked me if I could help her set up a budget once she gets her first paycheck. That’s cool stuff!

    • If you can get them doing it the right way from day one, I think there’s a great chance they won’t ever struggle with money, at least in understanding how earning, spending, and saving work. That’s my hope anyway.

  6. This is a great way to get kids interested in investing. The earlier kids learn and understand about finances in general, the better their financial future will look.

  7. “Mom, tell me again how those stock things work.” Awe! That must have been a very proud moment! I’ve said this before, but I wish my parents had been more open about talking about finances!

    • I wish mine had too. I’m very sure I’d never heard of the stock market until maybe late in high school, and not in the sense that it was something I could participate in. It really seems like a crapshoot what things actually stick in little one’s heads, but she thought about that happy meal and her stocks all the way home, even if she really doesn’t get it yet, she’s thinking.

  8. We actually just opened a UGMA account for our son to invest some of his savings. I think the best way to teach kids about investing and to get them excited is to actually do it. My son picked Nike and Dunkin Donuts and the two stocks he wanted to own and then I selected two ETFs for him to give him some broader exposure. He is excited that he has his money invested and keeps talking about putting more money in his investment account. He makes me proud. 🙂

    • I am not surprised. Our kiddos seem to think alike when it comes to money. It’s very exciting. I never thought about Dunkin Donuts! There are so many fun stocks to earn that are really good companies for the long haul!

  9. Love this! We’ve got 5 kiddos, 3 of whom are old enough to start something like this. They’re great a saving , but horrible at spending. Good problem to have, huh? I’ll look into it and make sure to go through your link.

    • It is a great problem to have. Kids really rack up with birthday money and stuff from grandparents, and they really need very little, especially in 2nd grade. I think letting them pick stocks is a great learning experience for life.

  10. I really wish my parents had been even remotely proactive. Alaskans get paid each year to be residents, so I had a LOT of money by the time I graduated high school. They never even put it in CDs, let alone real investments.

    One of the few failings of my mom’s financial education for me was the fact that I grew up clueless about investments — or, as I said, even CDs! I really needed to know more. So good for you for getting your kids away of it easily.

    • I had jobs off and on from the time I was 15 and would have been very receptive to something like this, but I don’t think investing was this easy when I was a kid. Now the CD thing would have been a much better idea than blowing all my money on clothes and movies.

  11. *aware, not away. It’s been a long day

  12. I think it’s good for kids to understand the stock market, but instead of teaching them to “pick” the right stocks or identify good stocks, I will teach them about entrepreneurship and economics. A lesson on those two things is likely more valuable than a lesson on the stock market.

    • Both great tools to have. We aren’t quite up to that stage and I was looking for something to hold money besides a savings account.

  13. Love this, Kim! You can get kids interested in investing, especially when you choose companies they have interest in, like Mattel, Disney, etc. My nephew asked me when he turned 10 to stop buying him presents and to instead invest the money for him. You can imagine I was pretty tickled with the idea and now he has a pretty nice little nest egg. But the best part is he has seen how market volatility affects his investments and how to keep his cool, which is a lesson many adult investors need to learn too! And for those who aren’t quite ready to invest yet, you can still do it hypothetically too, which we have done with the girls.

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