Teaching Kids to Buy Stocks: Lessons for Grown Ups

3 August 2019

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Ever consider investing in stocks? Teaching Kids to Buy Stocks is the perfect introduction into the world of investing for both you and your kids.

First of all, I want to thank J.J. Wenrich, the author of Teaching Kids to Buy Stocks, for sending me his straightforward introduction into investing in stocks to a guy who practically knows nothing about investing. Better yet, I have a daughter of my own. She’s not quite ready to invest in stocks (2 1/2 years old) but I can at least prepare myself.

 

That’s what this book is about, educating yourself to pass on what you’ve learned about stocks to your kids. One of the best things about Teaching Kids to Buy Stocks is that it makes investing simplified and helps you to realize that buying stocks is like running your own business.

 

Investing is about the fundamentals of a company. You should buy stocks not because of the charts but because of the business. Think about it this way, if you were either working or running a business but didn’t really like how the business was running, would you stay there? No. So the same goes for investing. Only invest in a company you would work at or run.

 

Teaching Kids to Buy Stocks Tips

The book is filled with great tips on every page. I will split this section into two parts, one will be for investing tips, and the other will be for parenting tips. Here are a few of the best ones for you to jot down in your notes.

 

Investing Tips

When you get your paycheck from your job or pay yourself if you are your own boss the first thing you should do with your money is share it. The second is save it. and last is spend it. Sacrifice to save your money rather than spending all of it. You also need to make sure you’re investing a fraction of your total salary.

 

Compound Interest

Stocks represent a business. If you own stocks you actually own part of that business. Even though the return is usually around 6-7% this can add up a lot especially if you have a diverse portfolio. Real investors will keep in the game for the long run as compound interest adds up.

 

Buy Low, Sell High and Diversify

These are important but not the only important thing in investing.  Here are some other examples of what’s important when teaching kids to buy stocks.

 

-Short-term investments for short-term goals and long-term investments for long-term goals.

-Match your types of investments with your types of goals.

-Stocks are always a long-term investment of at least 5 years. The longer the better.

-Keep your investing money separate from your saving money.

-Low risk, low reward. High risk, high potential reward.

 

Story, Numbers, Expectations

Each company you invest in has a story. You want to invest in a story that means something to you. That connects with you on an emotional level. If the story doesn’t match then you should not invest in that company. So the story behind the company really does matter to a true investor.

 

As for numbers, they really don’t lie, but sometimes they can surprise you and unexpectedly drop. Don’t freak out when this happens, because it’s bound to do so. It’s important to stay calm and let the storm ride out rather than pulling your money out too soon and lose profits. We must try to stay as rational as possible when it comes to stocks. You need to successfully control your expectations to match the story and numbers of the company you’re investing in.

 

Parenting Tips

Teach your kids about the tips from the above section by starting out with helping your child to invest part of their allowance into stocks. Most importantly is to make sure you talk about money with your kids because if you never do, your kids will never know much about money. The school system doesn’t teach about it much at all so it’s up to you.

 

-Decide which chores will be paid. Some responsibilities are just part of life and shouldn’t be paid such as cleaning up after your own mess.

-Use a chore chart.

-Don’t give chores if your kids already have several after school activities. Kids need a few hours a day just to wind down.

-Take care of your business before you take care of your play.

-Let your kids experiment with their money. Support an entrepreneurial spirit.

-Talk about the businesses you see around you daily. How does the business make money? Is it public or private?

 

Teaching Kids to Buy Stocks Activities

-Hold a 12-month investing game where each of you will research and invest in one stock. At the end of the game see who comes out on top.

-Watch Shark Tank and discuss the businesses being pitched. You really can learn a lot about good and bad business opportunities from that show.

 

Enjoy Teaching Kids to Buy Stocks Even if You Know Nothing About Investing

I knew very little about investing before reading this book and it’s definitely a better book for a beginner compared to something like The Intelligent Investor by Benjamin Graham which goes into depth about all the different kinds of investing. When you read this book you’ll get a concise explanation into many investing terms and strategies to use while investing.

 

If you’re really interested in getting involved in investing and you have kids then Teaching Kids to Buy Stocks is a great book to invest in (pun intended).

 

To purchase Teaching Kids to Buy Stocks click here.

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2 comments

  1. It does sound like a great book. Stocks are a great way to increase wealth and include in your portfolio.

    2 November, 2019 at 12:41 pm

  2. Matt Hutson

    It’s a very good introduction if you know nothing about stocks.

    2 November, 2019 at 8:22 pm