Stock Up on Wisdom
Buy low, sell high? It's not that simple, is it? It's hard to know what the right move is when investing, especially when thinking about the future. Things are never quite as cut and dry as they may seem, are they? It can be stressful to figure out what the next, best move might be when investing in the stock market. Luckily, with the help of these few sugary examples, we can introduce kids to the basics of what it means to be a shareholder— and show them how powerful investing can be to helping a company succeed.
Try this activity at home or at school. By showing kids first-hand what investing is all about, everyone can gain awareness in a very tasty and memorable way. It’s easy when you check out this sweet worksheet from the Stock Market Section of the Investing Strand of FUTURES: Financially Literate Kids for a Financially Literate Society™. Just download the PDF and share it on an iPad or print out a copy for each of your new “investors!”
Decisions, Decisions!
Remember, a shareholder needs to decide whether to sell shares, hold shares, or buy more shares in a company. Take a look at the journey Sam starts with his Mom and decide with your kids what they think the best move would be after each example.
And don't forget, if you sell your shares, you only lose ownership totally when you sell all of your shares, selling some not all still denotes ownership in a company. If you decide to stay, you are taking a risk and “banking” on the company doing well.
Take Your Time
It's important to take your time. One of the best lessons a young investor can learn is to take a few moments to stop and really think over each investing situation. After reading about the start of Sam's hit Candy Company, decide with your kids what they best approach would be. Is it the right time to invest in the Sam's new popular candy?
Sam's got a new hit candy on his hands and he wants to expand his line. He adds grape and lime, but it doesn't seem to be the same kind of big hit that Strawberry was for his Candy Company. Stocks can be tricky and sometimes there isn't an easy or clear answer. Remind kids that sticking with a company even when they aren't performing as well as expected can be the key to getting a sweeter return later. Will they stick with Sam?
With the announcement of Sam's mother's retirement, do you think it is the time for you to leave the company as an investor, too?
Remind kids that all answers are welcome and as situations get more complicated, it always helps to take a moment to think about it. While Sam's mother helped him get this sugary venture off the ground, it was his idea in the first place. Is it time to jump ship or stick with Sam and his vision for a sweeter future?
Sticking It Out Can Mean Sweet Results
Take the time to make sure the kids understand that as shareholders, they have a vested interesting in helping the business to grow and in protecting their own investment: shareholders of the Candy Company are considered owners of this company. As owners, they want to help Sam and his Candy Company grow, so they BOTH can earn a profit. Sometimes shareholders get even more involved by helping to brainstorm ideas for the Company at a shareholder's meeting. These meetings are the time when shareholders have a voice and can make an impact about company decisions and plans for growth. Will kids hold out for a sweet (potential) return? As investors, this decision is up to them.
A Bold Move
Sometimes a company can make an unexpected move and diversify their line. That's just what Sam did by adding Chocolate to his line of Candy. And it paid off big time! Give a hand to the kids who stuck it out with Sam; their stock in the Candy Company has now doubled in value! This is the benefit that can come from investing in companies you believe in—you’ll stick it out and guide it to success with more patience. Sam made a potentially risky move by expanding their line in such a different way, and because of how he did it, it worked. Now Sam's candy company is even more popular and successful.
Sweet Results for Sam
Sam decided to continue to expand his Candy Company empire by adding new flavors of blueberry and cherry candies. As a shareholder, you've been with the company since the beginning.
Ask your investors:
Is it time to cash out or do you want to continue to support Sam's company as a shareholder?
As an investor, it’s time to ask yourself if you want to invest even more in the Candy Company and buy more stock—or do you want to sell your shares while the stock price is high, take your profits and invest in other companies?
Be sure to tell the kids there's no wrong answer!
Being a shareholder comes with its own risks and some potentially big rewards and it is rarely easy to decide what the right next move is. It's important to emphasize to kids that they have an in-“vested” interest in helping the business grow and that patience is the secret ingredient to potentially seeing a big return.
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Check back tomorrow for our next financial literacy post. For more information about FUTURES: Financially Literate Kids for a Financially Literate Society™, this amazing (and FREE!) financial literacy program for students in kindergarten through eighth grade, or to download sections from the program, please click below.