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Investment for kid's IRA


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1) what's an easy to follow investment book that you'd recommend?

2) what are 1-3 stocks that one can do some analysis on? (i.e., not too complicated)

 

Goal:

1) have them learn investing;

2) use the learning to analyze some stocks as practice and hopefully invest.

 

thanks.

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What age?  The Little Book that Beats the Market by Joel Greenblatt is pretty good, and he wrote it for his 7 year old.  With my 7 year old I just pulled together a bunch of logos from brands that he is familiar with that I don't think would be terrible companies to hold for the next 15+ years and let him pick 3 or 4.

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2) what are 1-3 stocks that one can do some analysis on? (i.e., not too complicated)

 

 

I would try to find something your child is interested in, e.g., sports --> Nike, cosmetics --> L'Oreal, TV --> Netflix.  If the first company "analysis" goes well, then try another more generic company in the same or a related industry.  Someone learn a lot just by trying to understand the differences in gross margins between, say, Nike and Jerash Holdings.  (Of course, this is stolen from Buffett's lessons about See's Candies, etc.)

 

 

 

 

 

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2) what are 1-3 stocks that one can do some analysis on? (i.e., not too complicated)

 

 

I would try to find something your child is interested in, e.g., sports --> Nike, cosmetics --> L'Oreal, TV --> Netflix.  If the first company "analysis" goes well, then try another more generic company in the same or a related industry.  Someone learn a lot just by trying to understand the differences in gross margins between, say, Nike and Jerash Holdings.  (Of course, this is stolen from Buffett's lessons about See's Candies, etc.)

 

Perhaps the Motley Fool website? They do a good job summarizing what the companies do in an easy to understand format.

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Probably not what you want to hear, but you might want to go entirely 'modern' ...

Put the investment into a Crypto Exchange Traded Fund, have the kids learn about crypto through the various videos that are freely available; and let them practice on any of the many de-fi sites. Modern kids, learning the modern way.

 

Crypto/blockchain will probably be THE major technology and investment of his/her generation. Kids need to become as comfortable with it as breathing - and the 'old folks' need to get out of their way! Let little Johnny/Suzie take a few knocks along the way, and get right back in there - giving as well as they get.

 

Different approach.

 

SD

 

 

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Probably not what you want to hear, but you might want to go entirely 'modern' ...

Put the investment into a Crypto Exchange Traded Fund, have the kids learn about crypto through the various videos that are freely available; and let them practice on any of the many de-fi sites. Modern kids, learning the modern way.

 

Crypto/blockchain will probably be THE major technology and investment of his/her generation. Kids need to become as comfortable with it as breathing - and the 'old folks' need to get out of their way! Let little Johnny/Suzie take a few knocks along the way, and get right back in there - giving as well as they get.

 

Different approach.

 

SD

 

Don't know about OP, but this could potentially be a good idea so OP also learns from the process

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Don’t have specific suggestions for you but you won’t prepare them for the coming wars by giving them worn out tools or limiting their context to one that dominated your own thinking and ideas. Give them a choice and let them find their own way.

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Don’t have specific suggestions for you but you won’t prepare them for the coming wars by giving them worn out tools or limiting their context to one that dominated your own thinking and ideas. Give them a choice and let them find their own way.

 

Fair enough, though I do want them to start with some solid understanding of investing -- maybe it's my bias, but I would not want them to buy TSLA or Gamestop just because everyone else is buying.

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The kids will be more than occupied with a BTC ETF.

Periodically give them a small allocation to open an account on the de-fi platforms and 'play'. Of course they will lose the money, but in the process they will also learn about the commissions and transactional delays related to token trading. Experience that will save them a great deal of money later; when it matters.

 

Good luck!

 

SD

 

 

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Greenblatt's book is the best I've seen, so far.

 

Morgan Housel's book has a story about a very wealthy tech entrepreneur who went bankrupt. And Read, the janitor, who got rich slowly.

 

My eldest is very interested in money and math, so I could probably go pretty deep into the income statement. But for most kids, you just want to give them a healthy respect for money. For example, when we walked through the casino at Atlantis, I pointed out how fancy it was. And that the money to build the casino came from the gamblers. My son understood that he'd rather own the casino than be the gambler.

 

My son will be getting Domino's Pizza stock for his birthday.

 

---

As an aside, it is probably worth discussing:

 

Productive Assets (good businesses)

Non-productive Assets (gold, collectibles, crypto)

Depreciating Assets (cars)

 

I talk to my son about how many athletes go bankrupt even though they earn millions.

 

Like SD, many kids will be tempted by the bottom two. But the surest path to wealth is to invest in productive assets. For most kids, you should just convince them to put 10% of their paycheck into a Vanguard fund. I wish WEB would rewrite his famous gold essay for Crypto, but I assume he doesn't understand it well enough.

 

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End of the day, kids just need to learn basic 'money management' - it should have been taught in high school, but sadly isn't.

'Investment' is really more about developing common sense, and a strong moral compass.

 

Simply apply a magnet (Bitcoin), and you can 'bend' any compass :)

Knowing 'how' is lesson 1, knowing how to defeat it (apply heat) is lesson 2, avoiding the temptation to then 'rig the game' is lesson 3. 

Everyone will learn differently, some quicker than others.

 

SD

 

 

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How do young kids get income to contribute to IRA? Is gift from parents considered income? Can they get income for doing household work? I guess some kids must be generating income from entertainment industry.

 

My wife had a childhood IRA and they funded it by making the children employees of the family company and putting the children's wages into the IRA. 

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