Every Christmas and birthday my kids get many presents. A few weeks later the presents are mostly forgotten or broken. Such a waste! I started brainstorming ideas that could cut down on the clutter and be a long term benefit for them. I considered savings accounts, bonds, cds and the cookie jar. Stocks was the winner!
Here are my reasons for picking stocks:
1. High dividend stocks make money for them.
2. Stocks splits give them more stocks.
3. My teen thinks its cool to have a stock portfolio (my youngest,8, doesn’t care right now).
4. I pick stocks of products that they like. In our case, they get 4 McDonald’s stock a year.
5. If you aren’t into picking stocks, go with an index fund.
Four a year? That’s not much!
True, but take the case of my 8 year old. He will have 40 shares when he turns 18, plus the dividend that gets paid. It doesn’t take long for the stocks to accumulate enough dividend to start buying more stocks. Keep reinvesting the dividend, it adds up!
Risk
I know that the market will go up and down. This is a long term investment for them. I’m not taking too much risk
What about fees?
I use Sharebuilder for my kid’s portfolio. Their service is a bit odd in that you get a $4 fee when you buy on Tuesday (and only on Tuesday), other days it’s $12. Since my kids only buy twice a year and aren’t gaming the market it works out best for them. They also allow custodian accounts which is what you will need.
Action time:
1. Decid how much to buy.
2. Sign up for a service like Sharebuilder.
3. Open a custodian account in your child’s name.
4. Deposit the money.
5. Buy!
If your kids keep the investment going, they could potentially have a million when they retire. Like I said earlier, this is a long term benefit for them!
I have found that by creating an end goal keeps investing interesting and fun. Your goal could be a vacation, new big TV, pay off or buy a car, or some new expensive item. Having a purpose as to why you invest will help you stay focused. I have found without the end goal I start to lose interest in my portfolio. I would recommend leaving “filthy rich”* off the list, it’s too generic. Make your goal specific and give yourself a reasonable deadline. This tip works best for short term investing, for long term investing make your goal a specific number.
My goal is to pay off my family’s van with my short term stock portfolio.
* I have met a rich person and I have met a filthy person, but I have yet to meet a filthy rich person.
This is a free service offered by Yahoo!. To get the most out of the service is best to have a Yahoo! account which will include free e-mail.
This service offers:
• News
• Stock quotes (opening and closing amounts, 52-week range and day’s range, last trade amount)
• Charts
• Company fundamentals (dividend, EPS, P/E, etc.)
• Investing information (stocks, bonds, ETF’s, etc.)
• Personal finance
• Personal portfolio tracking
Stock research
This is a good resource to research new stocks. Yahoo finance gives current news about the company from respectable sources like the Wall Street Journal, Fools, and Investment Business Daily (among others). The charts have a variety of settings including daily, three-month, six-month, year-to-date and max date ranges. You can compare stocks, show events (stock splits, dividend, etc.), and use a variety of technical indicators (simple moving average, volume, etc.).
Portfolio
The service allows you to create different stock portfolios. You can create one for your holdings and one for your watch list. The portfolio page gives a nice grid layout of your stocks with a variety of information like last trade amount, percent change, volume and details about your shares (number of shares, priced paid, gain/loss, etc.). The downside of this service is that the stock price has a 20 minute delay.
This is an excellent resource to use when you’re getting started investing. I have personally used the service for several years and would recommend it to anyone just starting out.
The only way to make money investing is to start investing. If you know nothing about investing then you can begin by learning. Read a book about investing, magazine, website, or listen to an investing podcast.
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