Grandparents, the real world is the best classroom you have. Here’s an opportunity to teach your grandchildren valuable investing lessons and even get a little grocery shopping done at the same time!
Start with your younger grandchildren, ages 7-10. Have them go low-tech and bring along a small notebook and a pen. When you are strolling down the aisles trying to remember what you came to buy, give the grandchildren a challenge. Ask them to pretend that they are the Mom or Dad of a small family and they only have $50.00 to spend on food. What things would they buy? (You may need to coach them a little to get the answers you are looking for: the basics. You want your grandchildren to think that they should buy meat, milk, bread, eggs… you get the drill. Hopefully cookies and cake are not on the list. But shockingly, as an aside, people often still buy soda as part of their “staples.”)
Also, have your grandchildren make note of the company who produced the item. You are teaching grandchildren several lessons: first, how little you can buy for $50.00, and second, but most important, how they as a consumer can influence the stock prices of the companies that manufacturer or grow the items that people buy. You are making the connection between the supermarket and the stock market.
Again, I’ll cover the kid-consumer phenomena in other articles, but this is a great time to mention to your grandchildren that their generation influences about 80% of all household purchases. This translates into having a big influence on the price of stocks, as well.
Now step the challenge up a notch and say they have another $50.00 to spend on things like cleaning products for their home. What products do their parents usually buy? Have the grandchildren hunt out the laundry detergents, the bathroom cleaners, and the kitchen cleaners that look familiar. Now show them how to read those labels to see who made the products. Are many of the products made by the same company?
In subsequent articles, I’ll give you more details on how to get your grandchildren involved in investing. For now, here is the short explanation of the stock market that you should be able to cover in about half a grocery aisle: Companies can sell small pieces of their companies to others so that they can have money to grow. Those pieces of the company are called shares of stock. Those shares are bought and sold on the stock exchange. People want to buy stock because they can’t afford to buy a whole company. If the company does well, and lots of people buy its’ shares and the stock price should go up. So, if you bought the stock when the price was low and sold it when the price went up, you would make money. Also, some companies want to share some of the money they make with the investors. That money they give to the investors is called dividends.
Young kids have all heard us talk, or grumble about the stock market. If they listen to the radio, they hear the DOW mentioned as often as the weather. As I was writing this article, I stepped out to do a bit of my own grocery shopping and asked a mother in the grocery check-out line if I could ask her (9-year-old) child something about the DOW and what that means. She smiled and said, she would love to hear the answer. This young boy thought for a moment and said, “I don’t know. I only know if the radio says it has gone up, Dad is happy and if it goes down, he says a bad word.”
With the world of the internet and on-line trading, investors can get disconnected from the real companies behind the ticker symbols. When you are glued to a screen, hell-bent on your mission to buy and sell shares, your “mission” starts to look like just another video game. Our grandchildren are really comfortable with video games; it is their world. But, as grandparents, it’s our job to reconnect them with the real life that, in the case of the stock market, it is the underlying mission of investing.