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Although two major equity indices are near their all-time highs, investors are less enthusiastic about looking for stocks to buy. Declining Covid-19 case rates are seemingly baked into multiple asset valuations and causing the lull. However, this may be the perfect time to slow down and teach your kids about investing for the future.
Now, we all know that children are excited to learn about the stock market and all of its nuances. Jokes aside, even as adults, financial analysis can get incredibly dry — and I’m speaking as someone in the trade. The best way to teach children about investing is to relate it to their life. Introduce them to the market with stocks from their favorite toys and games, the music they listen to and even the family’s weekly grocery trip.
But I should say this before we move forward: Thanks to the proliferation of blogs, social media and YouTube, you’ll find a litany of finance experts. Many of them will declare that it’s never too early to teach your kids about money. Frankly, I disagree. You know your kids the best, so you should make that judgment call. Besides, I think kids should be kids — not little stock market tycoons.
That being said, there are times when children should learn the basics of the market. Financial illiteracy is a massive problem in the U.S., and not teaching your kids anything about money is the wrong choice. With that in mind, here are fun stocks to buy that can double as an educational opportunity for kids:
Warner Music Group (NASDAQ:WMG)
Dave & Buster’s Entertainment (NASDAQ:PLAY)
One last thing — parents should aim for balance with their kids. As The Atlantic once argued, people should avoid tying chores to money; otherwise, it links all work to a financial motive. Instead, teach your children the value of principled work. Once the proper foundation is set, it’s easier to talk about responsible investments.
Stocks to Buy: Disney (DIS)
If you could teach your children about one stock, your best bet is Disney. The Magic Kingdom has it all. From resorts to theme parks to a near-monopoly on compelling, family-friendly entertainment, DIS stock is unrivaled.
At over $170 a piece, a share of DIS stock isn’t exactly what you’d call cheap. That’s probably its only drawback. On a psychological level, kids want more, more, more. Unless you hail from a wealthy family, an allowance from grandma usually wouldn’t cover one unit. And it might be a little too early to talk to your kids about fractional stocks to buy.
So be prepared to pony up some of your own money. But your kids are most likely to learn about the market as they grow up with Disney. Given the company’s exceptional content library featuring the Star Wars and Marvel Comics universes, DIS stock is perpetually relevant.
Microsoft is typically considered a boring consumer technology company, and its core businesses don’t resonate with kids. Yes, Software as a Service and cloud computing will play pivotal roles in the company’s economic future, but come on. This is all school stuff. Fortunately, MSFT stock is tied to an exceptionally relevant market: video games.
According to data from Statista.com, last year, “revenue from the worldwide PC gaming market was estimated at almost 37 billion U.S. dollars, while the mobile gaming market generated an estimated income of over 77 billion U.S. dollars.” Furthermore, the gaming console market size was $34.3 billion in 2019 and may reach over $51 billion by 2027. We’re talking big numbers, and Microsoft’s Xbox console consistently delivers the goods.
Of course, on a cost basis, MSFT is a tricky stock to buy for your kids’ market education. At over $260 a pop, it’s hardly cheap. And only the wisest kid will spend their allowance on one share of MSFT instead of the latest console or hardware accessory. Still, if you can find a workaround, Microsoft stock is an excellent opportunity to have fun and give your children a valuable education.
Stocks to Buy: McDonald’s (MCD)
Source: ATIKAN PORNCHAIPRASIT / Shutterstock.com
Before I start with McDonald’s — perhaps everyone’s favorite fast-food restaurant to eat at or criticize — I must say that I have mixed feelings. According to multiple medical studies, childhood and adolescent obesity in the U.S. is a major public health concern. Supporting junk food stocks may not help matters.
Still, only the most draconian parent would deny their kids a fast-food treat every now and then. Moderation is essential, whether it’s about dietary choices or stocks to buy. So, next time you’re at McDonald’s with the family, you might bring up the fact that you can buy shares of MCD stock.
As your kids grow older, they’ll recognize the importance of investing in blue-chip stocks and learn about the power of resonant brands. With the right guidance, your progeny can earn dividends from McDonald’s rather than get their first job under the Golden Arches.
Movie theaters have struggled as content streaming services have risen to prominence in the market. Even the meme stock phenomenon is probably not enough to spark sustained upside for companies like Cinemark.
This brings up a point I’d like to make. Yes, I’m deliberately avoiding the other cinema company you’re thinking of — I’m not sure getting your kids involved in meme trading is a responsible move. Cinemark is a more conservative cinema stock and better-suited for young investors.
Despite the challenges that movie theaters are facing, I believe CNK stock provides an excellent teaching moment for kids. First, the box office may have suffered some revenue losses, but it’s not going away anytime soon. With competing entertainment sources that are comparatively expensive, going out for a summer flick represents accessible family fun. As you grab your popcorn and snacks, you can throw in some pointers about stocks to buy.
Second, some cinematic experiences just aren’t the same on the small screen. When a new Star Wars or Marvel Comics-based movie comes out, fans of all ages will want to see it at the box office. Movie theater magic can keep businesses like Cinemark going for a long time.
Stocks to Buy: Warner Music Group (WMG)
Source: David Tonelson / Shutterstock.com
In the analog days, kids had to remember the names of their favorite songs and artists when they played on the radio. Then, it was off to the record shop to buy the vinyl, 8-track, cassette or CD. It was also probably much easier to make money from music-related stocks.
At the time, people didn’t have access to the online resources we take for granted today. That meant companies in the music industry could charge a lot more money for products, whether that be a single or a full album. Today, consumers can just download a track they like for a buck. It just doesn’t have the same romance as it used to.
Still, the pop music industry is as relevant as ever. And with the industry cracking down on illegal downloads, record labels are making music great again — well, at least on the business end.
This might be a perfect platform to teach your kids about stocks to buy. Even if your children don’t have musical talent, if they know what’s up, they can profit from their knowledge about today’s music and stocks.
Dave & Buster’s Entertainment (PLAY)
Source: Jeff Bukowski/Shutterstock.com
Admittedly, Dave & Buster’s Entertainment stock is a bit complicated for early financial education. Of the times I’ve been there, the company catered to the happy hour crowd. With kids, they’re happy all the time — or at least they should be — and they’re not old enough to be Dave & Buster’s customer base.
If you’re an underage reader, statistically speaking, most of you will be put into a drab gray box when you get older and start working. From there, you’re going to be spending most of your days trying to convince a senior manager of your value to the company, while his or her job is to undercut your self-worth. So take it from me — always keep your options open!
Anyways, that’s why happy hour exists. It’s not really an appropriate subject for young children. So, why is a company that’s known as an adult playground on this list of stocks for kids? After all, most locations won’t even allow them inside until they’re adults.
But let’s be fair. Kids understand greasy food and watching TV together, and while they may not totally get arcades, they certainly get playing video games with friends. And your older teenagers may start to appreciate the business narrative for Dave & Buster’s.
While PLAY stock is risky amid the uncertainties of the pandemic, perhaps it can serve as a lesson in research and contrarian stocks to buy.
Stocks to Buy: Costco (COST)
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With the inclusion of Costco, you might want to ask me: have you completely lost the plot, mate? Yes, I have, but that’s not the reason I’m looking at COST stock as a financial education opportunity.
Granted, it’s a stretch. Most kids would probably rather be sitting at home playing video games than hanging around mom and dad as they go shopping. But with the high cost of childcare, most households don’t have the luxury of leaving their kids at home. So, off they go on the family Costco trip.
It’s difficult to keep kids entertained as you walk up and down the grocery store aisles. But maybe, just maybe, you can use your next Costco run to teach your kids about global supply chains, bulk pricing and the principle of break-even economics.
Or, you can let them know that if they don’t want to be pushing carts for the rest of their lives, they’d better listen to their parents about stocks to buy.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.
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