Corporate quarterly earnings might not sound like an exciting topic for eight and nine year olds, but when they own a few shares of Target stock, suddenly they’re interested. This morning Target (TGT) reported quarterly earnings that blew away expectations, and they also gave strong forward guidance. The stock jumped 10% in pre-market trading, meaning my kids accounts were set for a $50 boost. Fifty dollars! Remember, when you are eight, that means you could afford just about anything in the Target toy aisle. Kids’ investing metrics are measured in toys.
The best part about investing with kids is the chance to talk to them about all of this financial gobbledygook. Stuff that normally wouldn’t get discussed much around a dinner table, but that adds to their understanding of how business works, what being a public company means, how they are affected by that with their ownership in stock, etc..
We sit down every Friday for maybe fifteen minutes and go over their portfolio and look at charts. Every week, so far, we pick a new stock to buy (we’ll eventually end up with about 10 stocks in their first year). This involves lots of back and forth conversation, mostly centered around trying to think of companies that my kids actually know, or care about. We’re quickly running out of those, actually, so will move on soon to more general concepts like finding a solar energy company, or a space exploration company—things that they can get their heads around and be interested in following along and discussing.
So, it’s been about a month since we started the Stockpile accounts for my kids. Let’s have a look at what we’ve done so far.
You can see they are up to 6 stocks, all of which are pretty obvious examples of stocks that kids can understand the basic function of. It’s very easy to discuss these companies, how they make money, what they think is good or bad about them.
“Amazon is trying to deliver their packages themselves more and more, instead of using UPS or FedEx. Do you think that’s good for them? Why?”
“Frozen 2 is coming out soon. What do you think that will do to the stock price? Go up, right? Did you know they’ll probably make more money from selling Elsa and Anna toys and t-shirts than they will from the movie itself?”
“So Target just announced that they are selling a lot more stuff online than they were just a few months ago. Why do you think that’s a good thing for them?”
It’s a lot of fun to have these discussions and see the pieces of the puzzle clicking into place in their heads. The benefits of these talks are immediately apparent, and I can already see how continuing to do this over time will really cement a solid relationship for them regarding investing for their future. The reactions from showing them that they have made $143 in one month just by having this money working for them is also fun to watch.