How to Pick a Stock with Your Child: A Fun Family Exercise
One of the best financial lessons you can teach your child is how to invest in the stock market. But instead of just explaining it, why not make it a fun, hands-on family exercise?
✅ Investing teaches kids how money grows over time. 💰
✅ It helps them understand how companies make money. 📈
✅ It develops smart financial habits early in life. 👨👩👧👦
By picking a stock together, your child will learn how to research companies, analyze stocks, and make smart investment choices!
Step 1: Explain What a Stock Is in Simple Terms
Before picking a stock, your child needs to understand what a stock is.
📌 Simple Definition:
A stock is a small piece of ownership in a company. When you buy a stock, you become a tiny part-owner of that company!
📍 Example:
If you buy one share of Disney stock, you own a small part of Disney!
If Disney makes more money, your stock price goes up.
If Disney struggles, your stock price goes down.
💡 Lesson for Kids:
"Owning a stock means owning part of a company!"
Step 2: Brainstorm Companies Your Child Already Loves
🎯 Ask Your Child These Questions:
✅ What stores do you like to shop at? (Target, Walmart, Amazon)
✅ What brands do you wear? (Nike, Adidas, Crocs)
✅ What technology do you use? (Apple, Microsoft, Google)
✅ What shows and movies do you watch? (Disney, Netflix, Warner Bros.)
✅ What food do you eat? (McDonald's, Starbucks, Chipotle)
📍 Example:
If your child loves Disney, they might enjoy investing in Disney stock (DIS)!
If they use an iPad or iPhone, they might want to invest in Apple (AAPL)!
💡 Lesson for Kids:
"The best investments are in companies you know and love!"
Step 3: Research the Stock Together
✅ 1. Look at What the Company Does
Help your child understand how the company makes money.
📍 Example:
McDonald's makes money by selling burgers and fries.
Amazon makes money from online shopping, cloud services, and ads.
💡 Lesson for Kids:
"A good stock is in a business that makes money and grows over time!"
✅ 2. Check the Company’s Growth
Look at the company’s past stock performance to see if it’s growing.
📍 Example:
Go to Yahoo Finance, Google Finance, or Robinhood and look up the stock.
Check if the stock price has grown in the last 5 years.
💡 Lesson for Kids:
"The best stocks grow in value over time!"
✅ 3. See If the Company Pays Dividends
Dividends are extra cash companies pay to investors just for owning their stock.
📍 Examples of Dividend Stocks:
Coca-Cola (KO)
McDonald's (MCD)
Apple (AAPL)
💡 Lesson for Kids:
"Some stocks pay you money just for owning them!"
Step 4: Compare Different Stocks & Make a Decision
Now that your child has a list of favorite companies, it’s time to compare and choose one stock to invest in!
📌 Things to Consider:
✅ Which company has grown the most in the past 5 years?
✅ Which company is most popular and likely to grow?
✅ Which company do they truly believe in?
📍 Example:
If a child loves both Nike and Disney, compare them to see which has stronger growth and future potential.
💡 Lesson for Kids:
"Great investors choose stocks based on research, not just favorites!"
Step 5: Buy the Stock & Track It Over Time
Once you pick a stock, it’s time to buy it together and track its progress.
✅ 1. Open a Brokerage Account for Your Child
You can buy stocks through kid-friendly brokerage accounts like:
📌 Stockpile (lets kids invest with parental guidance).
📌 Fidelity Youth Account (teens can manage their own investments).
💡 Lesson for Kids:
"Investing is easy with the right tools!"
✅ 2. Track the Stock Together
✅ Check the stock price once a week.
✅ Watch for big news about the company.
✅ See if the stock goes up or down over time.
📍 Example:
If your child buys Apple stock, they can check if the price rises when a new iPhone launches.
💡 Lesson for Kids:
"Stock prices move up and down, but long-term investors win!"
✅ 3. Set a Long-Term Investing Goal
Encourage your child to hold their stock for months or years instead of selling quickly.
📍 Example:
A $100 investment in Amazon in 2000 is now worth over $200,000!
💡 Lesson for Kids:
"Investing is about patience—money grows over time!"
Bonus: Turn Investing into a Fun Family Game
To keep your child excited about investing, turn it into a game!
🎲 Game #1: The "Family Stock Market Challenge"
Each family member picks one stock to invest in.
Track the stocks for 6 months and see which one grows the most!
📍 Example:
Mom picks Amazon (AMZN)
Dad picks Tesla (TSLA)
Child picks Disney (DIS)
💡 Lesson for Kids:
"Friendly investing competitions make learning fun!"
📊 Game #2: “Stock Market News Detective”
Have kids find news articles about their stock and report if it’s good or bad news.
Discuss how news affects stock prices.
📍 Example:
If Nike signs a new celebrity deal, will the stock go up?
💡 Lesson for Kids:
"News affects stock prices—stay informed!"
Conclusion: Make Stock Investing a Family Tradition
By picking a stock together, kids and families will:
✅ Learn how to research and analyze stocks.
✅ Understand how businesses make money.
✅ Develop smart financial habits that last a lifetime.
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