Determining which stocks would be a good option for kids to buy involves scrutiny of the company's financial stability by a qualified adult. After the adult does the risk-assessment homework, a number of quality stocks that may directly appeal to a child's interest can be identified. Stocks to choose from could include companies that the child is familiar with and that carry risks comparable to those for other blue chip companies traded in U.S. markets.
If you wish to spark and maintain the child's interest in the investment, choose from the multitude of companies that produce his favorite things. For example, many American children are quite familiar with video games. Well-established companies that manufacture games include Electronic Arts, an S&P 500 corporation and parent of EA Sports, as well as Nintendo and Sony, among others. The Walt Disney Co. is also a well-established, publicly owned corporation that may interest kids buying stock.
Another approach to finding good stocks for kids to buy could be to invest in their favorite foods. For example, Kellogg Co. and General Mills, both makers of kids' cereals and snacks, are S&P 500 listed companies with long histories of past and current financial statements you can study. Campbell Soup, Coca-Cola, Dr Pepper Snapple Group, PepsiCo, H.J. Heinz (the ketchup company), Kraft Foods and the Hershey Co. are examples of corporations in the consumer staples industry with brands familiar to many children.
In the consumer discretionary sector of the stock market, Yum! Brands, the parent company of subsidiaries Long John Silver's, Pizza Hut, KFC and Taco Bell, may be a good stock for kids. And there is always fast-food giant McDonald's Corp. Both Yum! Brands and McDonald's are S&P 500 listed and have long track records that can be scrutinized to assess value and personal fit in a portfolio.
Toys and Retail
Toy makers may be another consideration in choosing good stocks for kids to buy. The products of both Hasbro and Mattel are probably familiar to most children in the U.S. For example, Hasbro manufactures toys and games under the Milton Bradley, Parker Brothers, Playskool and Tiger Electronics brand names, in addition to Hasbro Games. Clothing retailers such as the Gap, or clothing manufacturers such as Nike, are other options.
With thousands of publicly traded companies available to U.S. investors, finding good stocks suitable for kids to buy simply involves research. For example, older, Internet-savvy children may be interested in buying shares of stock in Google, Yahoo!, Microsoft and Apple. Considering the child's special interests — whether it is trains, planes, computers or clothing, or if he goes with Grandpa to Home Depot or Lowe's every Saturday — can narrow the field of choices of good stocks for kids to buy. It can also make financial evaluation of companies less time-consuming for the adult guiding the process.
- 360 Degrees of Financial Literacy: Investing ABCs: Teaching Your Children About Stocks
- Charles Schwab: Teaching Kids Investing Basics
- New York Stock Exchange: Stock Market Savvy: Investing in Your Future
- "Finance: Investments, Institutions, Management"; Stanley G. Eakins, 2005