Opening Segment #3:
'A Family Affair - Investing For Kids'
Friday, June 19, 2009
 

Jim's
rating on
this stock

STOCK
SYMBOL

Closing
price that
day

Full Company Name

MCD*

58.17

McDonald's (MCD*)


DIS

23.53

Walt Disney Co. (DIS)


HAS

25.14

Hasbro Inc. (HAS)


VFC*

59.25

VF Corp. (VFC*)


GPS

15.80

Gap Inc. (GPS)


AAPL

139.48

Apple (AAPL)


Jim:      Most parents, when they want to teach their children the value of saving money, will take them to the bank... get them a passbook... or maybe buy them savings bonds. Let me tell you something... if you really want to teach your children how to be smart with their money, I say forget the savings account, and open up a brokerage account... because the best way to make sure your kids know how to manage their money, is to get them interested in it... in investing... and, for better or worse, it doesn't get any more interesting than stocks and something you can talk about with them...

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Friday, June 19, 2009

(Cont'd from above)...

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Jim:      I wish I could buy individual stocks for my kids but, luckily, you're not weighed down by the same kind of restrictions I have... And I know exactly the portfolio I would put together... five stocks that would make investing fun... even for a toddler...

And tonight, on this special "Father's Day: It's a Family Affair" edition of Mad Money, I'm going to share it with you...

We're playing "Am I Diversified?" for Declan... That's our Executive Producer's son (showing his baby picture). She just had him on Monday... Yeah, we miss her... we miss her. Actually, Declan can't own the stocks either... same rules that I have. It doesn't matter. He can have a rotisserie league and play with fake money...

 

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So what stocks should you buy for your kids to get them interested in the market?...

You want to buy companies they actually like, and are familiar with... ones that they can get excited about.

McDonald's (MCD*)
First, I think you've got to start with Mickey-D's... you've got to start with
McDonald's (MCD*). I don't know a parent who hasn't taken a kid to McDonald's, if only for the clean bathrooms. It's where children want to go eat. It gives away the great toys that they love so much, and it's exactly the kind of company that can get kids interested in the market, and you talking with them about money.

I'm not saying you have to take your kids to eat there, although believe it or not, it now has tons of healthy - or at least healthier offerings - to go along of course with the massively-good fries. But it's something to buy even just, again, a single share of.

Plus McDonald's is a well-run company with a lot of international exposure. It makes a terrific weak dollar play, and we think the dollar's going to get weaker on Mad Money... That 3.4% yield... a terrific way to teach your kids about the value of compounding reinvested dividends. That's that "rule of 72" I've been talking about, where you divide the number 72 by the yield, and it tells you how long it will take to double your money, if the stock just goes nowhere (and the stock price remains flat). In the case of McDonald's, from the yield alone, it will take 21 years to double your investment. Who knows? If you start early, it could pay for a week's worth of college tuition. Because I know as a father, who pays that bill, it's gone up at least tenfold.

I'd buy at least one share as soon as your kid is born, or even before then, as I've always thought it'd be a great idea to register baby showers with Schwab or TD Ameritrade... Macy's has nothing on them.

Walt Disney Co. (DIS)
Next, I'd pick DIS, a company that every child would recognize, with the theme parks, the animated films, the Jonas Brothers... especially with Pixar. There's simply no publicly-traded company that will get a kid more involved in investing than a Hannah Montana/Miley Cyrus Disney. It's got a terrific CEO in Bob Iger, and is simply a world-class franchise that I think your kids could own for years. It held up really well during the big selloff.

Hasbro Inc. (HAS)
Then I think you want a toy company to get your kids owning something that they're also playing with on a regular basis. You can't beat Mr. Potatohead, Tonka Trucks, My Little Pony... not to mention any of the Milton Bradley or Parker Brothers' games. Board games, by the way, are a great way to connect with your kids... What better way to teach them about money than with the company that makes Monopoly?... HAS let your kids truly own a piece of Boardwalk and Park Place... and has the added advantage of being a consistent grower with a cheap stock.

VF Corp. (VFC*)
You're going to want some retail too... something that your kids will be familiar with. Now
Gap Inc. (GPS) works as a company that we'll recognize as kind of a turnaround situation. Not my favorite, but who doesn't take their children to Gap Kids?... You want a better stock though? One that I think will have a much better chance of going dramatically higher?... It's a brand that I think your kids will be even familiar with. I would swap out of GPS and swap into something called VFC. They're the maker of kid-friendly, North Face clothes... which I think by far... by far... will have it all over the Gap. Now, just so you know, understand... I own VF Corp for ActionAlertsPlus.com, my charitable trust. I think they're having a much better quarter than most people realize.

Apple (AAPL)
Finally, to round out our gambit of "Am I Diversified" for the youngest demographic, I want to throw in a share of AAPL. You might think this technology company, at $138, $139, is something that younger kids wouldn't be aware of but, believe me, you'd be surprised at just how much awareness of Apple's brand there is among even really young children. They'll be hitting you up for their first iPod before you know it.

You can also think of Apple as a stock your kids can grow into, not to mention the fact that there's nothing more engaging than a stock that actually goes higher. And Apple's at the forefront of a product cycle that should produce multiple year gains.
iPhones, iTunes, iChat, iPod... How about iBuy?...

The bottom line...

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The Bottom Line!:     The best way to teach your kids about money is to either open a brokerage account, or start a rotisserie stock league with fake money, and buy them one share of McDonald's (MCD*), Walt Disney Co. (DIS), Hasbro Inc. (HAS)... VF Corp. (VFC*) or Gap Inc. (GPS), but not both... and Apple (AAPL)... a diversified portfolio that can really get them engaged with the process of investing. I'm speaking from experience...

 

[verbatim recap]

[end of segment]


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