How My Kids Learned About Investing While Getting $300 Per Hour

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Matt Bell at Sound Mind Investing recently shared on their blog that ShareBuilder is offering a $50 bonus for opening a new custodial account by the end of the year.

To get the bonus, you need to open a custodial account and use the code INVEST4KIDS. You can deposit any amount as long as you make a stock trade.  See full terms and conditions at the bottom of this post. 

I bank at Capital One 360 (formally ING Direct) and each of my kids have a sub account too.  (We signed up for an account a couple of years ago when they offered a $25 bonus for opening a kids account.)  I decided that it wouldn’t take very much time to get them each an account up and running.

When I read about the offer, I asked each of the kids if they wanted to learn about investing. (My kids are 8, 6, and 4.)  I told them they’d each get $50 from the bank if they went through my short investing class.

Of course, when you’re young $50 might as well be $50 million.  At my kids’ current pay rate, that’s about a year or two worth of wages.

They all wanted to invest.

I boiled investing down to two concepts:

  1. Buying a stock is a lot like buying a part of a company.  If the company makes money, stock holders make money.  If the company loses money, stock holders lose money.
  2. The more risk you take, the more you can earn, but the more you can lose as well.

With those elementary bits of knowledge, I sat each kid on my lap one at a time.  Since we already have Capital One 360 accounts, it took less than 10 minutes to get set up.

My two oldest had $45 to invest, and the youngest had $20.

I asked if they wanted something safe or something risky.  If they said, “Safe,” I bought them an S&P 500 index (SPY), and if they wanted something more risky, I planned to get the Russell 1000 index (IWD).  In the end, it probably doesn’t matter a lick what they picked because all investments were less than $40.

The process was actually healthy for the kids because, in the process of talking about investing, I was able to share with them how mom and dad have been putting money every month into an account for their college.

While they don’t understand much about what’s going on, this gives them a bit of a clue.

There has been some great concern mentioned by my oldest (and most responsible one) because her younger brother by two years has more money in his school account.  I guess that’s the blessing of being born close to a market downturn.

In the end, it was a good experience for my kids and a good return for 10 minutes of their time.  Hopefully, these small investing seeds will produce fruit in the future.  Since the sooner you start investing the better, I hope the kids are off to a good start.

$50 Offer Terms and Conditions:

 You must open a new ShareBuilder account, enter promo code INVEST4KIDS by December 31, 2013 and make your first trade by February 14, 2014 to be eligible for this promotion. You must have a U.S. Tax I.D. (Social Security Number) to open a ShareBuilder Account. Capital One ShareBuilder, Inc. limits one promotional award per unique Customer or custodial beneficiary. Capital One ShareBuilder, Inc. will deposit a $50 bonus within 7 days of your first trade. The $50 bonus from Capital One ShareBuilder, Inc. is not available for withdrawal for 120 days after it is awarded to your account. Capital One ShareBuilder, Inc. reserves the right to terminate this offer at any time and to refuse or recover any promotion award if Capital One ShareBuilder, Inc. determines that it was obtained under wrongful or fraudulent circumstances, that inaccurate or incomplete information was provided in opening the account, or that any term of Capital One ShareBuilder, Inc.’s Account Agreement has been violated. Offer expires December 31, 2013.

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