How to Design a Youth Stock Investment Program
Whether you are teaching a child about the stock market or creating a savings plan for his or her future, it is important to know the basics of a youth stock program. In addition, it is also imperative to be knowledgeable about the process of designing a youth stock investment program.
- Introduce the child to the stock market. Include basic concepts like the definition of a stock, changes in the stock market/changing values of stocks and types of stocks. Make sure you explain to the kid that he or she becomes part owner of the business.
- Help the youth to decide on a stock or stocks in which he or she would like to purchase. Stress the importance of stock values. In other words, explain that the price per share does not necessarily dictate his or her earnings.
- Choose whether you want to actually purchase the stock without trading, purchase with actual trading or complete the entire process for fun only. Purchase the stock or stocks if you choose to do the investment for real. You will have to place the account under your name, under a custodial account. Talk to the brokerage firm you select, because each one has its own rules regarding youth investment programs.
- Keep track of the changes in the stock(s). Use a spreadsheet to record the changes. Do this both for fun or to keep track of the real investment. Checking weekly is adequate to give the child an idea of the changing market.
- Assist the youth with trading and selling stocks when the time comes. Explain the general rules of when to buy and when to sell. Make sure you use simple terminology when giving any explanations or definitions. Stocks are confusing to many adults, so know that a young person may have many questions throughout the process.