The Newest Class Of Retail Investors May Be 7-Year-Olds With $5 To Spend On Stocks

The Newest Class Of Retail Investors May Be 7-Year-Olds With $5 To Spend On Stocks

retail investors

Financial planner Mac Gardner reads his book, “The Four Money Bears,” to children at an elementary school in Tampa, Florida, in November 2018. Photo with permission of Mac Gardner

It’s hard enough for adult retail investors to choose long-term rewards over instant gratification. Imagine trying to sell that to a child.

A growing number of parents are turning their children into retail investors by teaching the kids the value of owning a tiny bit of a company’s stock versus using their pocket money purely for consumption.

Emmanuel Rodriguez, 7, doesn’t own a Nintendo gaming console but he explained to a friend that he owns something better: a piece of the company. His $178 in Nintendo shares are part of his parents’ plan to teach him how to be smart with his pocket money, said Emmanuel’s father, Sebastian Rodriguez, in a Bloomberg interview.

Mac Gardner, a certified financial planner who runs the education company FinLit Tech, wrote the children’s book “The Four Money Bears.” The book introduces the four functions of money through its main characters: Spender Bear, Saver Bear, Investor Bear, and Giver Bear. 

Kids are bombarded with messages that cash is only for consumption, Gardner told Bloomberg. Children can pick up adults’ financial habits and lessons, so it’s important to educate them early, he said.

Some adults say they want to help their children avoid the investing mistakes they made by teaching them how to invest as little as $5 a pop—and by encouraging them to hold their bets during market volatility.

“In a subtle way, these families are also pushing back against the inequality plaguing the richest country in the world, where the top 1 percent of households control more than one-third of the wealth,” Daniela Sirtori-Cortina wrote for Bloomberg. “Investing is key to growing assets, yet just 56 percent of U.S. adults own stocks. Among families making less than $40,000 a year, the share is 24 percent.”

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There’s a growing number of educational and trading platforms that are catering to parents and kids who want to learn to be retail investors — non-professional market participants who generally invest small amounts.

Boyce WatkinsThe Black Business School offers courses for parents on what Black children need to know about the stock market.

John W. Rogers, Jr. opened the Ariel Community Academy on the south side of Chicago to teach pre-kindergarten through eighth-graders financial literacy by managing stock portfolios and creating business plans.

TeenVestor has been offering a news and information portal for young investors and their parents and teachers since 1999. Founders Emmanuel Modu and Andrea Walker co-authored three books about young investors and entrepreneurs: “Mad Cash: A First Timer’s Guide to Investing $30 to $3,000”; “TeenVestor: The Practical Investment Guide for Teens and Their Parents”; and “The Lemonade Stand: A Guide To Encouraging The Entrepreneur In Your Child.”

Listen to GHOGH with Jamarlin Martin | Episode 74: Jamarlin Martin Jamarlin returns for a new season of the GHOGH podcast to discuss Bitcoin, bubbles, and Biden. He talks about the risk factors for Bitcoin as an investment asset including origin risk, speculative market structure, regulatory, and environment. Are broader financial markets in a massive speculative bubble?