My oldest daughter recently celebrated her 9th birthday. Along with the usual crap load of Hanna Montana junk, she received some cash. Yesterday, completely unprompted, she informed me that she wanted to invest it. I naturally got a little misty, as it seems obvious she has inherited my financial skills.
She asked what I like to invest in, and I showed her my rapidly dwindling stock portfolio. It still impressed her, but she's 9. It doesn't take a very big number to impress her. I explained to her how stocks work, what dividends are, and what a P/E ratio is. I knew how much money she had, so I had an idea that she might only want to invest $40-$50. I then asked her what her price range was, and she replied "$2-$3 a share." And she informed me she only wants 2 shares. Luckily, in this economic environment $2-$3 will get you the controlling interest in GM.
We started doing some stock screening, and came up with a list of 80 stocks that were valued less than $5, had a dividend yield of greater than 4%, and a P/E less than 20. Naturally, the list was primarily companies she had never heard of. I was hoping for at least one that would make sense to her. Then I found Books-A-Million (BAMM).
I haven't pulled the trigger on BAMM yet. I can't allow her to spend more on transaction costs than the stock is worth. Maybe I'll buy some shares with her to absorb the transaction costs. Either that or I'll talk her into buying a lot more shares on margin. No one has ever gotten in trouble doing that.
Cy-Hawk Football Extended
7 years ago
2 comments:
Get her some practice shares! You can sign up for an account with OptionsXpress and have access to a free practice account with as much money as you want. And, if you forget to mail in the check to open the account, it doesn't cost you a thing. She can get some experience and she won't spend a fortune in transaction costs until she gets good at it.
Good idea Jennifer. That would give her something to do on the computer besides playing with Webkinz or watching the Jonas Brothers.
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