Should Kids Buy Stocks?

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The excitement for the Facebook IPO wasn't generated just by seasoned investors. There were a lot of newbies jumping in, including teenagers. Leading up to the IPO, the financial media had articles about teenage and college aged children urging parents to buy the stock or just teenagers themselves asking parents how they could buy in. It seemed like they all wanted to get in.

It was the first time I could recall since the dot-com boom that children, en mass, actually showed some interest in the stock market and in owning a piece of a company.

Disney and Apple Rule

It wouldn't be the first time that kids have bought a stock based on using the product or service. Disney has long been a favorite of younger investors who grew up on its movies and theme parks. Since the iPod debuted, Apple has also held a firm place in young investors portfolios.

I had a college friend whose parents bought shares of McDonald's for her starting in the 1970s simply because of the sheer number of times she requested a Happy Meal.

But with today's slide, Facebook shares are down about 24% from their IPO price.

For some young investors who were buying with summer job money in the hopes of a big payout, like paying for college, the IPO has been a rude awakening.

Should kids even buy stocks?

Or is the slide in the Facebook shares just a lesson that all investors have to learn at some point?

 

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