point of view on why they should buy a stock,”
said Louis Taylor, president of Taylor Wealth
Management in Oregon and father of two.
You don’t need to explain balance sheets, price-
to-earnings ratios or anything technical just yet.
Just help them establish clearer thinking about
their decision-making process.
Taylor took this approach when several college
students approached him during the GameStop
runup asking if they should invest. Instead, he
asked them why they would invest in GameStop
if they don’t even shop there. He was able to
help them conclude that maybe there was little
underlying value in the company.
“I think you should buy stock, but know why
you are buying it,” he said. “If you are passionate
about (a stock) because you have a belief in a
brand, that’s one thing. Don’t do it because you
saw it on a message board.”
Some parents open custodial brokerage
accounts, which can be used to invest in stocks,
bonds, mutual funds and more. The assets
belong to the child but the adult holds control
until they reach adulthood. Some parents allow
the children to have some say in how these are
invested as a learning opportunity.
Jordan Wexler, CEO of EarlyBird, an app that
specializes in custodial funds, said tying the
concept of investing to something in their real
life helps it come to life.
“Talking with them about their favorite
interests and activities can lead to a much
larger conversation about investing in valuable
companies in a way that makes sense for them,”
he said.