No. of Recommendations: 19
So my daughter turned 12, and I certainly wish my parents did a better job of explaining money to me than they did. In the interest of not repeating those mistakes, I opened a ShareBuilder account for my daughter - but she did most of the work.


I printed out the list of the 2011 Fortune 500. I figured for a 12 year old primary research into sectors, intense TA, and crawling through prospectus after prospectus would make her head explode.

I told her to go through and pick 20 to 30 companies that interested her. Pick what you KNOW, pick what you UNDERSTAND, pick what you like. Her choices were:

Chevron, General Motors, AT&T, Verizon Communications, Home Depot, Target, Apple, Boeing, Johnson & Johnson, MetLife, Best Buy, Safeway, Walt Disney, Coca-Cola, FedEx, Rite-Aid, Macy's, Kohl's, Staples, J.C. Penny, Toys R'Us, Starbucks, GameStop, Visa, AutoZone, OfficeMax, American Family Insurance, Mattel, PetSmart, Hershey's, St. Jude Medical, Big Lots, Con-way, and J.M. Smucker

Yup - she picked those on her own. First thing that jumped out at me, a fair amount of diversity, with weight leaning toward retail and CPG. That's OK, we're not investing in 29 companies.

I then did primary research with her on all 29 companies. I geared it toward a 12 year old. We look at 5 year and 1 year charts and compared against the S&P 500 along with peer companies (like XOM vs CVX as an example). We looked at P/E, compared it to the sector, we looked at trading range, CAPS ranking (stars are easy for a 12 year old to understand), analyst outlook for 2012 and 2013 and in some cases read through some comments.

Her breakdown form the above:

CPG: 4 companies
Energy: 1 company
Telco: 1 company
Retail: 4 companies
Technology: 1 company
Aerospace: 1 company
Entertain: 1 company
Restaurant: 1 company
Finance: 1 company

So - I told her she would need to eliminate two CPG companies, two retailers, and one sector to make it an even 10. Some more research.


1) Apple Inc.
2) AutoZone
3) Chevron/Texaco
4) The Walt Disney Company
5) Home Depot Inc
6) Johnson & Johnson
7) Mattel, Inc.
8) Starbucks Corp.
9) Visa Inc.
10) Verizon Communications

Grandma sent her a check she just got today for $100 to buy presents for herself. My daughter has elected to invest 50% of that check - along with the monthly investments.

Not crazy about ShareBuilders fee structure but don't know what else to do (open for suggestions before we get too far down the path). $12 a monnth is going to eat 12% of her monthly investment - certainly going to slow down ROI.

Her investment strategy will be LTBH and we'll revisit every 6 to 12 months (unless the economy dictates otherwise) to see if there are any really big winners or losers.

This is going to help her crunch numbers, read, and think critically. I also hope that it builds a very solid foundation out of the gate that savings is important, and even more important is being an educated investor.

I'm a proud papa bear this afternoon.
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