Investing For Your Child- Now Is The Time
January 28th, 2009 | By Kendra
When the stock market started going downhill this past Fall, I began to really contemplate the market. I have been saying for years that I’d like to invest money for my children, but I never got around to it. It always seemed like such a complicated, and expensive task. But once I saw stocks plunging, I began to really look into taking advantage of the low priced market. I remember Dave Ramsey saying that when stocks go down, think of them as being “on sale”. Well, there was a major sale going on, and I wanted to get in on it!
I was a little hesitant, and not sure how long the market would stay low. But after it seemed to only be getting worse, I decided I’d better jump in while I could. In October I started looking into buying stock, completely naive about anything to do with investing. My grandfather, an expert (in my opinion) in investing wisely, suggested that I try using Scottrade as my broker.
I pulled all of the kid’s savings out, a modest accrual, and brought their money to my local Scottrade office. First of all, I didn’t know that they wouldn’t take cash. I had to go to the gas station next door, and get money orders. Next, I didn’t realize that I wouldn’t be able to invest that same day. I had to wait a few days for the money to actually post in their accounts before I could start playing with it. So, that was a little disappointing. I was afraid that the market would suddenly skyrocket overnight and I would lose my chance. It didn’t. I finished the process, and opened the accounts in each child’s name. No fees, no cost. Then I went home and watched the market like a hawk, and studied which stocks I thought I’d like to buy.
Now, I am by no means an expert. I am brand new at this. BUT, I’ve listened closely to many experts, and paid attention to what they are saying. NOW IS THE TIME TO BUY… as long as you will not need this money within the next 5 years. If you have a little money stashed away for your kids, seriously consider investing it. Everything is at bottom prices right now, and eventually they WILL go back up. Since I don’t plan on giving my kids their savings until they are atleast 18, I know I have time to safely invest their money, and I don’t have to worry about if they lose some in the short term.
I wish I could tell you which stocks you should buy. I wish I knew. But I will tell you how I picked mine.
- First, think of a product that you use often; something that you need (ie: electricity, gas, food…). I think it’s wise to invest in things that people cannot do without.
- Next, find the stock symbol for the company, and then look up their 5 year record. If their stocks have increasingly gone up (until this past year), then it’s probably a good one to invest in.
- Pay attention to what the media is saying. If you are hearing that a company is close to bankruptcy, or is closing, common sense tells you not to invest in it.
- Diversify: Don’t spend all of your money on one company. You need to spread it out between several, just in case one of them goes very badly, that way you won’t lose everything on that one. But keep in mind that there is a fee every time you buy/trade, so take that into consideration and don’t waste a lot of your savings on trading fees. Be sure how many shares you want to buy before you actually make your purchase.
Scottrade is cool because their fees aren’t crazy. I was afraid that brokerage fees would be outrageous, and that it wouldn’t be worth it to me with such little money to invest. What I like about them is that if you do all of your trading yourself online, you only have to pay a one time fee of $7 for every trade (no matter how many shares of that one company you buy). And that’s all I’ll ever have to pay them. Plus, they will give you free help and advice over the phone if you need it.
Trading online really isn’t as daunting of a task as it may seem either. If you are comfortable navigating the internet, you can do this. The hardest part in investing in making up your mind which stocks you want to purchase. After that it’s just a click of a button and it’s yours. It’s really that simple. You just have to research, research, research, and do the best you can to make a good decision.
I’m sure there are other stock brokerages out there that are great too. All I can tell you about is what I am familiar with, and have tried. But if you have a little stash of money in your kids savings account or piggy bank, maybe you ought to consider putting it somewhere where it just might grow to a substantial amount by the time they are ready for it.
So, tell me, have you invested yet? Got any advice to share? I’d love to hear your thoughts!!
