My 10yo wants his own stock funds, or whatever the proper terminology would be. Clearly, I know not of what I speak. My money is in a 401k, selected at the higher risk level (17% growth this year!). That's the end of my knowledge.

When I was his age I had money in the stock market, but I don't remember any details. I assume this is a common thing, parents opening accounts with brokers for their kids. Any tips or recommended companies before I start?

When I wanted to do this for my granddaughters, I walked down the block to Schwab and opened an account.

It must be in the name of an adult as trustee, as someone under 18, maybe 21, to be legally responsible for the transactions.

As far as investments goes, one of the low cost value oriented offerings is likely to be as good as any. If, as, and when he starts to learn how these things work, you can encourage him with entry level books. “The Little Book of Value Investing” by Christopher Browne will be a good one when the time comes.

Investopedia has a mock stock market where they give you some money to play with and you invest it in real companies. That might be something he'd be interested in before putting in real money?

Fidelity is also a good option. They have local offices in some places and the online account process was very easy if I remember correctly.

They offer plenty of access to no-load/no-fee mutual funds and ETFs.

Fantastic. By all means set him up.

I think you need to find a local with the heart of teacher. That's what my Dad did for me, but I was older. It was awesome, the old guy, an Edward Jones broker, would rather sit and talk and teach people about finances, investing, patience and discipline than eat I think. I remember still the lecture he gave about lusting for "stuff" vs investing and finding a working balance between the two.
Once, he actually brought out a big Crystal Ball and sat it in the middle of his desk in front of me. Then he asked me what did I see in it. I said "nothing". He said look REAL hard... I said "I only see the top of your desk". Exactly! he said. Then he brought out a laminated poster with types of funds and investments etc, grouped by risk and with their historical performance, all color coded. He then explained that since no one has a working crystal ball THIS is really all we have to go on...

Good luck!

I'll echo acidjazz's comment.

My dad had me make a virtual stock portfolio on a site updown.com (now closed) in the late 90's/early 2000's. You could trade, options, the whole nine yards.

I learned a lot of lessons playing around on that thing that I feel were best learned with play money.... like the danger of taking aggressive short positions, and the benefits of not caving to the emotional waves the market takes.

If your kid is into it, have him give it a try. There's several of them still on the web:
http://www.marketwatch.com/vse

As for the real money, Robinhood.com has an app which makes it pretty accessible to kids although not sure your 10 yr old has his own phone/tablet...) and no fee/commission for trades.

The problem with an app and no fees is frankly, most traders would be better of making less trades and holding positions longer... but if he's investing a small amount of money, no fee is nice. Playing a 50$ position with a $4.95 fee kinda sucks.

You can't go wrong with a discount brokerage like Fidelity or Scotttrade if you want something a bit more institutional.

Great idea, can't start soon enough.

Suggest you go to www.seekingalpa.com Then Search for the writer "Regarded Solutions" and read his postings on "Team Alpha Retirement Portfolio II" (TARP II). He recently put this together with the younger investor in mind. Someone with a 20-30+ year investment horizon.

Not the answer for everyone but he has put a lot of thought into it. The related articles can also give you some good food for thought about your own retirement.

Suggest you avoid brokers, mutual funds, and 3rd party managers altogether.

Look into Dividend Reinvestment Programs, known as DRIPS. They have no management costs -- NONE. You can make small contributions, buying only a portion of a share, if you want to, and you can do this by sending in a check or by auto-draft from a bank account. And as your stock pays dividends those dividends are automatically reinvested into your stock account.

Google DRIP (here is an example of the kind of information you'll find: LINK. You'll find a lot of good stuff about how these accounts work, how to get your first share (there are clubs that you can join in which members commit to sell other members an initial share at market value only -- no mark up. The one I used a couple decades ago was/is known as "First Share".), and how to use these to achieve financial security.

DRIPS are a very good, no management cost, honest way to invest yourself in the stock market.

I would have the kid do some research, put to together a portfolio and have him explain to you why. If what he says sounds reasonable, start an account (minor in trust?) with pretty much any discount brokerage, deposit the money and buy the portfolio. Let the kid track it, and make changes on the same basis.

This way your kid can teach you the stock market

Can I recommend Motif?

You move some money into an account. Then, you use an online portal to build a "portfolio" of up to 30 stocks called a "motif."

Then, you purchase all the stocks at once for $10 a trade.

So you can give your son $500 bucks, he can pick 10-20 stocks to invest in, set the percentage of each stock you want to percentage, and buy them all at once.

I would have him go to the library and read Value Line Investments which is carried by most libraries. They should also have other investment newsletters, etc.

quote:

When I wanted to do this for my granddaughters, I walked down the block to Schwab and opened an account.

It must be in the name of an adult as trustee, as someone under 18, maybe 21, to be legally responsible for the transactions.

As far as investments goes, one of the low cost value oriented offerings is likely to be as good as any. If, as, and when he starts to learn how these things work, you can encourage him with entry level books. “The Little Book of Value Investing” by Christopher Browne will be a good one when the time comes.

Best post here. The kid will then have a face to associate with his money. Edward Jones has an office next door to mine, and they generally are pretty down to earth people. They are more likely to be interested in small accounts, and are told to do this sort of thing, even though it does not make money for them.

quote:

Originally posted by 41:
I would have him go to the library and read Value Line Investments which is carried by most libraries. They should also have other investment newsletters, etc.

Pretty tough for a ten year old.

ValueLine is a great and up to date resource for researching, but it takes a certain level of sophistication to get enough out of it to stay interested. Some day it’ll be very worthwhile for him.

Great idea!! I would start simple. Charles Schwab made it easy for anyone to be a stock investor. Open a basic brokerage account and buy small quantities of individual stocks. It doesn't have to be through Schwab. Use a discount broker like Schwab or Fido if he's going to be more self-directed; go to a full-service broker for more guidance or if you happen to work up a good rapport with one.

Do just stocks and bonds for now. Save the fancier stuff like funds for later. Even if he eventually invests in mutual funds or ETFs etc., better to learn about what fund managers do by doing it yourself first.

Keep it simple so he doesn't become overwhelmed and learns at his own pace. He doesn't even have to do all that well at first, as long as he's learning. The real payoff will be when he nudges the kid next to him at school and asks her, "So, how's your stock portfolio coming?"

I have all my accounts at schwab including an account each for my son and daughter. It's in my name just earmarked for them. I started with $100 each per month adding any cash they ever got at birthdays or Christmas etc. schwab has the cheapest proprietary index funds, cheaper than fidelity or vanguard. And you can buy their funds for $1 !! or most any other mutual fund for $100 and subsequent investments are as little as $1 I have all cap gains and dividends reinvested. We talk about the large companies they own every time we drive past a McDonald's or shop at Walmart. We talk about how we own a tiny bit of the company and our purchase goes towards their profits which make our investment grow. Basic stuff a 7 and 9 year old can grasp. They don't know how much their accounts are worth of course. more advanced investment theory comes later

I would avoid single stocks unless you have a significant amount to avoid single stock risk. If child insists they need to own Facebook or Apple or whatever the hot stock is show them the top 10-50 holdings of the s-p500. The top 10 companies are like 20% of the index