Reading, writing and ... investing?
Children can find stock purchasing
a simple proposition
Children learn to identify By David Wight
brand names at an early age ONE CHRISTMAS morning
and can use that recognition several years ago, Sheila
when picking investments. Schoeplein and her husband
had an eye-opening experience. The Lancaster, Pennsylvania, couple watched their
grandkids open dozens of
toys—and clearly saw the
future. The toys would be
used for a period and then
discarded, eventually donated
to a thrift shop. It was time for
“Investments were the
answer,” says Schoeplein,
now grandmother to 11. “We
decided to turn Christmas and
birthday gifts into stock purchases via custodial accounts
so our grandchildren will have
something of value down the road.”
Many parents, grandparents, aunts, uncles and
others have experienced the same epiphany, and have
turned to custodial and education savings accounts
(ESAs) as alternatives for birthday or other occasion
giving. Some parents have taken that concept further
by converting allowances into monthly investment
accounts, or by creatively matching a child’s contributions, using that match just as an employer motivates employees with 401(k) contributions.
Schoeplein discovered with her youngest grandchildren the convenience provided by Costco’s online
investment provider, ShareBuilder. Custodial savings
accounts and ESAs are simple to set up and manage
online, and ShareBuilder purchases stock in specified
dollar amounts, with fractional shares acquired.
While Schoeplein’s grandchildren are too young
to participate in account decisions, other Costco
members have experienced how educational the
management of custodial accounts can be.
Pride in ownership
When her daughter Katie was 5 years old, Jennifer
Carole started telling her about how someone can
own a part of a company, planting the seed for what
grew into an ongoing dialogue about investing. She
set up a ShareBuilder custodial account, and Katie
helped decide which companies she wanted to own
part of—a very brand-oriented process.
PHOTODISC “I encouraged her to pick companies she cared
about,” says Carole, a technology-industry worker in
Silicon Valley, “because she was consuming their
goods and helping them be successful.”
Not surprising, the youngster was most interested in Nickelodeon, her favorite TV network, and
also suggested Band-Aids and Mattel.
In addition to monthly investments, when Katie,
now 8 years old, gets birthday or Christmas money,
there’s a formal talk about where that money goes.
“She knows that she’s a part owner of certain
companies, yet the concept of money growing is still
too abstract,” Carole says. “But if Nickelodeon comes
out with a new show that she likes, I hear, ‘That’s my
company; they’re doing a good show that will help
the company.’ She does understand that the company being successful is good for her too.”
Use it, like it ... own it!
In Beaufort, South Carolina, James Everidge
has been advocating a similar investing approach to
his three children—ages 10, 13 and 14—for the past
“I want to teach them about long-term investing
from the simplest entry point—what are you interested in?—and parlay that into investing in a video
game or clothing brand,” says Everidge, who works
in medical sales.
“When I was a child, I didn’t get any direction
like that,” he says. “This is the best time for them to
learn that investing isn’t hard, and it makes a big
impact to show them on a calculator the results of
30 years of steady investment.”
He talks to his children individually about their
accounts, and tells them that if they like a product, it
can be as simple as that. “Do you use it regularly?
Does it work for you? Do other people need it? It
doesn’t have to be difficult picking an investment,”
What kind of account is right for the child in
your life? There are tax considerations, and you may
want to go over the differences between custodial
savings accounts and ESAs with a tax specialist. Both
types of accounts are available through ShareBuilder.
For more information or to open an account,
go to costco.com and enter “online investing” in the
Search box. C
While each story is a true experience of an actual investor, ShareBuilder does not represent that everyone will have a similar experience. These stories should not be considered investment advice or
a guarantee of future performance. References to specific stocks
are for illustrative purposes only.
ShareBuilder is a registered broker-dealer, member FINRA/SIPC, and
is not affiliated with Costco.