Friday, February 21, 2014

Investing strategy for children

A month ago, I was up on the Motley Fool web site and I read the following:

I just read this, "Start them without their knowledge. Just begin before they're old enough to ask about it! CromulentBrad's parents did this, buying shares of several companies they related to when he was little. Later, when he found out, it was exciting to see his holdings grow bigger almost automatically. He's planning to do the same thing for his 19-month old daughter.”

That seemed pretty cool, so I wrote a relative with young children and asked, "If you have the spare time, can you think of 5 - 10 companies the kids identify with. Would it make more sense to have two lists, one for each?"

And the reply was:
- Nickelodeon. Owned by Viacom. VIA
-Hmm Target TGT
-Cheerios made by General Mills .GIS
- Leap Frog..LF.. 
-Hershey ..they love chocolate milk HSY
-Suave.. There kids shampoo/ body wash owned    by bath and body works ..BBW
- Tide P&G

All of these products they readily identify with by name and use. You have come up with a very cool idea indeed! 

Now we all know that some of these products only account for a fraction of the revenue of some of these products is only a small component of the total revenue of the company, but that is not the point. The point is to get them thinking about investing.

Let's do a quick analysis.

  • VIA, they are loaded up with too much debt for my taste, let's pass on this one.
  • TGT, more debt than I like to see, but they have dropped a lot, partly because of the data breach, and that retail store has a loyal following. LC was 56.37. 5 shares for each kid would run 281.85
  • GIS, again more debt than I like to see, but Cheerios is an enduring brand 5 shares would be around 248.1
  • LF, largest children's tablet maker, market has beaten this down. Say 40 shares.
  • HSY, low dividend  yield, high debt, not a compelling purchase, however, they have a go to market strategy of becoming international. 2 shares apiece.
  • Bath and Body is privately held, nothing to do there.

M + S (each, please reinvest dividends)
5 TGT market 281.85
5 GIS market  248.1
40 LF market 280.00
2 HSY market 215.16
4 trade fees = 36
1061.11 let's round to 1075 each

2,150.00 total.

UPDATE 2/5/15 Just read an article in Seeking Alpha titled The best gift you can give is stock. Since I have already taken action, I am not going to do any more. But it did make me smile.

1 comment:

  1. What a nice way to introduce little people to investing, m'love!