Teaching Kids How to Research a Company Before Investing
Investing in the stock market is more than just picking a company you like—it’s about understanding how that company makes money and grows over time. Teaching kids how to properly research a company before investing will help them:
✅ Make smarter investment decisions. 📈
✅ Learn how businesses operate and grow. 💰
✅ Develop lifelong financial skills. 🏦
By following a simple research process, kids can evaluate companies like a real investor and choose stocks that have strong long-term potential!
Step 1: Start with What You Know
The first step in researching a company is choosing a business your child is already familiar with.
🎯 Ask Your Child These Questions:
✅ What companies do you use every day? (Apple, McDonald's, Netflix)
✅ What stores do you shop at? (Walmart, Target, Amazon)
✅ What brands do you wear? (Nike, Adidas, Crocs)
✅ What video games do you play? (Roblox, Nintendo, Activision)
📍 Example:
If your child loves Disney movies, they might be excited to research and invest in Disney (DIS) stock!
💡 Lesson for Kids:
"Start by researching companies you know and use!"
Step 2: Understand How the Company Makes Money
Once your child picks a company, help them figure out how that business makes money.
📌 Key Questions to Ask:
✅ What products or services does the company sell?
✅ Who are its customers?
✅ How does it make a profit?
📍 Example:
McDonald's (MCD) makes money by:
Selling burgers and fries in restaurants.
Owning real estate and renting it to franchise owners.
💡 Lesson for Kids:
"Good companies make money in different ways—not just one!"
Step 3: Check If the Company Is Growing
Before investing, kids should look at whether the company is growing.
📌 Key Research Tools:
✅ Google Finance or Yahoo Finance – Look at the company’s stock history.
✅ Company Website – Read about its mission and future plans.
📍 Example:
If a child is researching Nike (NKE), they can:
Check if Nike is selling more shoes every year.
Look up if Nike is expanding into new sports or regions.
💡 Lesson for Kids:
"Good companies grow their profits over time!"
Step 4: Compare the Stock Price Over Time
A great way to research a company is by looking at its stock performance over time.
📌 Key Things to Look At:
✅ Has the stock price gone up over the last 5 years? 📈
✅ Did the company survive tough times (like COVID-19)?
✅ How does it compare to competitors?
📍 Example:
Compare Nike (NKE) vs. Adidas (ADDYY):
Which company’s stock has grown more over the last 5 years?
Which company is investing more in new products?
💡 Lesson for Kids:
"A strong stock grows steadily over time—not just for a few months!"
Step 5: Look at the Company’s Competitors
A smart investor doesn’t just research one company—they compare it to its competitors to see which one is better.
📌 Key Questions to Ask:
✅ Who are the company’s biggest competitors?
✅ Why is this company better (or worse) than its competitors?
📍 Example:
Apple vs. Samsung:
Apple sells iPhones, MacBooks, and iPads.
Samsung sells Galaxy phones, TVs, and other tech.
Which company makes the most profit?
💡 Lesson for Kids:
"The best investments are in companies that are stronger than their competition!"
Step 6: Find Out If the Company Pays Dividends
Some companies pay investors extra cash (dividends) just for owning their stock.
📌 Examples of Dividend Stocks:
✅ Coca-Cola (KO) – Pays investors every 3 months.
✅ McDonald's (MCD) – Has paid dividends for over 40 years!
✅ Apple (AAPL) – Pays small but steady dividends.
📍 Example:
If your child wants to invest in McDonald's, they might love that it pays dividends just for holding the stock!
💡 Lesson for Kids:
"Some stocks pay you just for owning them—just like collecting rent in Monopoly!"
Step 7: Read the News About the Company
Good investors always stay informed about the companies they invest in.
📌 Where to Find News:
✅ Google News – Search for updates about the company.
✅ Yahoo Finance – Check if the company has made any big announcements.
📍 Example:
If your child is investing in Tesla (TSLA):
Did Tesla release a new electric car? 🚗
Is the company making more profits than last year? 💰
💡 Lesson for Kids:
"Good investors stay updated on their stocks!"
Step 8: Make a Final Decision & Buy the Stock
Now that your child has done their research, it’s time to decide if the stock is a good investment.
📌 Final Checklist:
✅ Is the company making money?
✅ Is it growing every year?
✅ Does it beat its competitors?
✅ Does it pay dividends?
📍 Example:
If a child researched Apple (AAPL) and found it’s growing, profitable, and pays dividends, they might decide it’s a good long-term investment!
💡 Lesson for Kids:
"Research helps you choose stocks wisely—not just guess!"
Bonus: Fun Investing Games for Kids
🎲 Game #1: Stock Market Treasure Hunt
Give your child 5 companies to research.
Have them find 3 reasons why each company is a good or bad investment.
📍 Example:
Why is Netflix growing?
Is Walmart making more profits than Target?
💡 Lesson for Kids:
"Smart investors do their research before buying stocks!"
📊 Game #2: “Family Stock Challenge”
Each family member picks 1 stock to invest in.
Track which stock grows the most in 6 months.
📍 Example:
Mom picks Amazon (AMZN)
Dad picks Tesla (TSLA)
Child picks Disney (DIS)
💡 Lesson for Kids:
"Investing is more fun when you compete and learn together!"
Conclusion: Smart Investors Research Before Buying Stocks
By teaching kids how to research a company before investing, families will:
✅ Make smarter, more confident investment choices.
✅ Understand how companies grow and make money.
✅ Develop lifelong financial habits that lead to wealth.
And the best part? You don’t have to figure it out alone!
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