Teaching Your Kids to Invest in Child-Friendly Stocks

A key to this process is to do it in a way that gets the kids directly involved and interested. One of the best ways to accomplish this is to select an investment that kids understand and can identify with such as stocks of companies whose products kids use and are familiar with like Disney, Microsoft, McDonald's and Mattel.

Purchasing shares in a mutual fund that invests in these types of stocks is one of the easiest ways to get kids started. A unique fund that seeks to teach young people about investing and provide a long-term competitive investment return is the Stein Roe Young Investor Fund. The Fund invests in stocks of companies whose products or services appeal to young investors. This Fund, established in 1994, has attracted more than 100,000 shareholders.

The Fund's shareholders receive educational materials that are written in kid-friendly language. These include "Dollar Digest," a quarterly newsletter that discusses basic investment topics and concepts and an activity book that includes puzzles and games aimed at sharpening young investors' personal finance and investing knowledge.

The benefits of starting children down the road to financial responsiblity are many. Children who understand money will be able to use it more effectively. The sooner they get into the habit of investing, the greater the potential effect of compounding on their investments. A parent's encouragement in making financially related activities a normal part of life can help give a child a meaningful head start toward becoming a financially responsible adult. For more information about the Stein Roe Young Investor Fund, including a prospectus, visit the company's web site at http://www.steinroe.com.

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