Boomers teach kids about investing well

CHICAGO -- I got a lesson in stock market investing the other day from an unexpected source: my 12-year-old son.

When I casually mentioned to Scott that stocks were making a nice comeback after a long slump, he promptly went to his room and unlocked the toy safe where he stashes his cash to keep it away from his younger brother. He returned with $93 in crumpled bills and told me to buy more shares of the restaurant stock we'd helped him buy three years ago.

"Now you have to match that," he reminded me with a smile, referring to a dollar-for-dollar pledge I'd made to get both boys enthused about investing.

As it turns out, he'd been setting the money aside for a stock purchase all along.

If only his baby boomer dad had taken such a diligent approach toward investing.

Many boomers, from a generation tending more toward self-indulgence than self-discipline, are trying hard to teach their children well when it comes to stocks and financial savvy.

Lessons in savings

There are many more opportunities for kids to learn about investing, from Web sites to investment camps to youth investment clubs. But mostly, they can listen to their parents who lived through the biggest bull market in history -- and took their lumps when it ended.

Krista Kurth, 44, of Potomac, Md., wants to make sure her two teen-age sons don't make the same financial mistakes she did as a young adult. She insists on regular chats about money management and investing -- discussions that would have been unthinkable under the financial secrecy of earlier generations of her family.

She also is requiring that they take investment courses and, from age 16, be responsible for earning and handling all their spending money.

Kurth worries that boomers' children want to have it all, but without their parents' can-do approach or work ethic.

"I'm concerned about the sense of entitlement among kids today. They just expect to have whatever it is they want," said Kurth, an entrepreneur who also oversees multiple family trusts. "They need to understand how to use money and how to use it well."

David Owen, 48, a Connecticut writer and stockbroker's son, exposed his kids to investing at an early age. One goal was to innoculate them as much as possible against the emotional highs and lows that drive many adult investors to irrational decisions. Mistakes and bad decisions were welcomed.

"When it comes to investing, I think, kids should be allowed to begin screwing up as early as possible, because many of the truly valuable lessons take years to sink in," said Owen, author of the recently published book, "The First National Bank of Dad."

Owen set up his own stock market for his son and daughter to buy and sell shares from him when they were about 8 and 12 years old, so they could learn about investing "with training wheels on."

The Dad Stock Exchange existed only in his computer records but used real money, with prices corresponding to those of real securities except for being denominated in pennies rather than dollars.

Owen picked out a half-dozen stocks whose names he knew they'd recognize, such as McDonald's, Microsoft and the Gap, and created portfolios containing 100 shares of each, totaling about $250. The kids could sell them, buy different stocks, add to their portfolios or simply let the stocks grow.

"The goal is not to turn them into little Warren Buffets but to give them a sense of themselves as investors," he said.

The plan worked well with Owen's children, although the record-keeping involved might not be for all parents. Just speaking frankly to kids about stocks and investing can be a simpler alternative.