Teaching your kids to invest responsibly can feel like a thankless chore. Kids and their parents move and think at different speeds. What's seemingly an eternity for a teen is a blink of the eye for mom and dad. An adult facing four years of college tuition payments followed by years of living off retirement understands the importance of putting aside money early. Most kids just can't grasp that concept.
From the kids' point of view, having mom and dad lecture them on financial basics can also feel like a chore. Given how little fun it can be for both sides, the process of learning investing basics turns the prospect of spending time together as a family into yet another item on a daily to-do list.
It doesn't have to be so bad. Teaching kids to invest isn't a one-way street. Learning from your children while teaching them financial basics can actually be fun and lucrative for the whole family. Set aside the textbooks and head to the mall together to shop for investing ideas.
Rachel Fox is an actress and editor of the popular Fox On Stocks website. She's also 16 and hip, giving her an uncanny sense for what's hot and what's not among her peers. She's created a "MyGenLoves" index and describes it as, "Companies that are very hot in my generation; things my friends love."
In the attached video Fox ran through four of the companies on her list. As it turns out, some of the names will sound very familiar to the parental set.
Analysts spend a lot of time trying to figure out how the world's biggest social network is going to "monetize" users, but the company's long-term success or failure is going to come down to its ability to keep its core customers from going elsewhere. Fox says FB is a winner in that regard but maybe not for the reasons you think.
"Facebook was really smart in acquiring Instagram," Fox says, describing the photo sharing company FB purchased for nearly $1 billion in 2012. "Instagram is actually the big social media thing that my generation is into right now."
Starbucks' appeal to teens is an afterthought, at most, for many investors. Conventional wisdom says teens are too young to drink coffee, preferring any of the dozens of energy drinks flooding store shelves. Fox strongly disagrees.
"We love our $5 coffees," she says. Her friends don't just like the world's biggest coffee chain for the java but also for the food. Yes, Starbucks serves food and teenagers like it. "We go and eat dinner there sometimes," she insists. Suddenly SBUX's purchase of fast-casual restaurant chain La Boulange last year doesn't seem so crazy.
Urban Outfitters (URBN)
If you want a one-picture description of teenagers' fickle taste, take a look at the chart of Urban Outfitters. The company's stock has made investors a ton of money, then it lost more than 50% of its market capitalization three times since 2006. Shockingly, for investors who left it for dead sometime in the 90s, teenagers have once again "discovered" Urban, a retail chain that went public years before Rachel Fox and her peers were born.
"We love Urban Outfitters," she says. "Right now it's hot." Even she can't pinpoint exactly what it is, but what Fox knows for sure is that Urban is the apparel company of choice at the moment — something that can't be all bad for investors.
Luxottica Group (LUX) (Owners of Ray-Ban sunglasses)
Ray-Ban aviator sunglasses were created in 1937. Most people with kids Rachel Fox's age have parents younger than Ray-Ban. Fighter pilots in the 40s, test pilots and astronauts in the 60s, and Tom Cruise with two separate movies in the 80s (wayfarers in Risky Business and aviators in Top Gun) have all fed Ray-Ban fads.
"They're hot again," Fox proclaims. Whether it's wayfarers or aviators, teens apparently can't get enough of Ray-Bans. They're her sunglasses of choice, and her friends prefer them to Gucci and other competitors.
"There's something kind of hipster about them," Fox says. "There's just some kind of niche they've created."
It's amazing the things you can learn from spending just a few minutes with a teenager. Facebook is hip largely because of an afterthought photo-sharing application. Teenagers eat dinner at Starbucks between trips to Urban Outfitters, and they actually think the sunglasses you probably lost somewhere in the late 80s are "hipster."
It might be even more of a shock to kids of high school age to learn it's possible that the companies where they spend their money could help pay for their retirement. Who knows? They might even gain a tiny bit more respect for their parents once they realize mom and dad are hip enough to know what aviator sunglasses are.
Knowing what's hot is only a starting point in the investment process, but running through the numbers on companies your kids know already can make the process of learning how to invest much more fun for teacher and student alike.