Buy Young Self High

October 02, 1995|By Sandra Crockett | Sandra Crockett,SUN STAFF

Brandi Pace likes to swim, roller skate and watch a little television, typical fare for a 13-year-old. But the Columbia youth has one more hobby, and, considering her age, it's a little atypical. Brandi enjoys perusing her mutual fund portfolio.

Make no mistake about it. The portfolio's reports come to Brandi -- not her parents or the grandmother who got her started in the fund. They are written in kid-friendly language, and the portfolio includes companies with which young people are familiar -- such as Disney or McDonald's.

You see, Brandi is a "Young Investor," a holder of "kiddie stocks" in a thoroughly '90s scheme to cultivate mini-moguls by teaching them a thing or two about finances -- and earn them a few bucks along the way.

Kiddie stocks for kids is the brainchild of Stein Roe & Farnham, a Chicago-based financial company. "We've gotten terrific feedback from the kids and their parents for providing the fund and for providing the educational information," says Thomas W. Butch, spokesman for the company. Brandi has pronounced it "interesting and cool."

Kiddie stocks? The times, how they have changed.

Used to be that socking away a little money into the kid's savings account was adequate. Then there were those parents with the foresight and the funds to start investing for their kid's college tuition while the tyke was still in diapers.

But even when parents invest or save money on behalf of their offspring, the children are often left out of the learning process. Stein Roe confirmed that two years ago when its parent company, Liberty Financial Companies, commissioned a survey of high school students to find out what they knew about investing.

The company learned that students were interested in investments but "only one in five were knowledgeable," Mr. Butch says.

Based on that survey, Stein Roe decided to provide the "Young Investor Fund" and invested in companies that appeal to younger people.

Mr. Butch believes Stein Roe is the first company to offer a young investor fund with educational materials targeted to youngsters.

The year-old fund has its own Young Investor Hot Line -- (800) 403-KIDS -- for mailing information to interested families. It is a no-load mutual fund, meaning that there are no commissions involved.

But say a mutual fund is not in your child's immediate future. This is not, repeat not, one more thing that overworked, underpaid parents should feel guilty about, says Debra Sherwin, a certified public accountant and associate professor of management at Goucher College. A parent's goal should be educating a child about money.

"It doesn't have to be that sophisticated," she says. "You take kids to the grocery store and they see money being spent. Or to the toy store. You can start by giving a young child $1 a week and having the child save some for a present for grandpa's gift. You can teach kids how to be responsible in many ways."

The families who choose Stein Roe as one of those ways often refer to the mutual fund (which is technically set up as a custodial account) as "kiddie stocks." Among the companies included in the mutual fund portfolio are Microsoft, Coca-Cola, Nike, the Walt Disney Corp. and McDonald's Corp. "We are investing in strong companies," Mr. Butch says.

The company is practically crowing over the first year's performance of the fund, which has grown to more than 6,500 shareholders and has more than $20 million in assets.

"Look How Your Money Grew!" reads a headline in its Dollar Digest newsletter, which the young investors receive quarterly. "In its first year, the Young Investor Fund earned a total return of 15.45 percent. This means if you had invested $1,000 on 4/29/94, your investment would have grown to $1,155. "

So far, Brandi is pleased, but it is too soon for her to see much of a profit.

It was her grandmother, Bertha Turner, who first learned about the fund.

"I thought this was something that would be really good for them," says Mrs. Turner, who invested $1,000 for Brandi and for her other granddaughter.

Brandi was curious. "When my grandmother first told me about it, she asked me what I knew about stocks and mutual funds," Brandi says. "I said, 'Nothing.' I wanted to know what it was about.

"I looked through the information that she gave me and I saw Nike, which is really hot. And Coke, and other companies that I had heard about. I could see some of the things that the money was invested in," Brandi says.

One of the ways that the company draws the interest of young investors is through the Dollar Digest newsletter, which includes quizzes and games focusing on money and financing.

One newsletter featured stories on Nike and included this quiz: "Which of the following is not part of the Nike product line. Team uniforms, cheerleading shoes, leotards, aquatic shoes or ice skates?"

The young people also receive a personalized certificate and an activity book with more games. Some young investors write to the fund managers and even suggest stocks they might be interested in.

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