How Would You Run Your Favorite Company?
Wow! Time really has flown by this last Financial Literacy Month, hasn't it? It's already time for our last Weekend WHAT IF blog post! For our last big “WHAT IF” question, we're asking the kids to put themselves in the shoes of the investor by imagining they're investing their own money in the stock market to help their favorite companies grow bigger and bigger.
Weekend-What-Ifs are one of the best ways to engage kids to think about what they would do in a given investing, entrepreneurial, and financial literacy situation. This is crucial in getting the students to actually care about investing and helps them begin to grapple with their own personal philosophies in investing. In addition, by putting your kids in the visualization driver’s seat on a weekend, you are helping them to “see themselves” in their bigger future——now.
Opening your kids’ eyes to the fact that finance is a very real concept both now and in their will help kids to understand that the choices they make today and the things they are learning today will both help to shape their lives as they grow up. Helping kids figure out how to best navigate the vast world around them helps kids better relate the importance of financial literacy today and for many tomorrows. There’s no time like the present to begin or review these powerful life skills. This blog post with certainly help with that.
How to Begin
Use this graphic to show the big picture of investing. Keep it close by during the activity to refer back to it as needed.
Begin by asking kids what companies they like. Ask them why and what they think it would be like to invest in these companies. Help by choosing your favorite company too and going through this activity together. Remind kids that as a lead investor in one of your favorite companies, you’re actually a part-owner! Remember, a stock represents ownership in a company; if you buy a stock from a company, you are now part owner of this company.
Five to One Faves
Ask the kids to brainstorm what some of their favorite companies are; suggest they make a list of five faves and narrow down to one for this exercise. If they're having trouble thinking of some, help them think of some of their favorite products and toys and help them think about who is making them.
Coffee cup and tennis shoes
Do you love going to Starbucks and getting to choose your own Frappuccino? Maybe it's time to follow that sweet tooth and invest in the company that makes some of your favorite treats.
Are you excited for the newest animated movie due to hit the streets soon? Maybe you should invest in your entertainment future and buy some stock in a major entertainment company.
to follow that sweet tooth and invest in the company that makes some of your favorite treats.
What about the new and hottest, most popular shoe company—ever? Maybe you should put your money where your favorite shoes take you.
Know Your Company
By encouraging kids to invest in companies they already support and like, they’ll learn a very valuable investing lesson: investors need to understand the company, its end users, the customer base, the market segments, and the company’s philosophies and priorities in order to be a savvy investor. What better way to learn than by experiencing the company first-hand (or first-foot) as a consumer?
It's Your Decision
It's important to stress that each kid can make a personal choice about their company—there’s no right or wrong choice for this exercise. Give kids ample time to think about their choices, favorites, and ultimate decision. Weave in a few future-based ideas and “what if” ideas by asking what kind of future they “see” for themselves. Ask them how they could potentially change their own future by investing in companies they believe in or in which they have a personal stake. In so doing, you're helping them discover and delve more deeply into their very own “Early Stage” Investment Philosophies.
Having an Investment Philosophy means that as an investor, you have a set of guiding principles that inform and shape your investment decision-making process. Summarize by underscoring that this same kind of decision-making that the kids just went through to arrive at the decision of what companies they wanted to invest in is the same kind of thinking any investor does. It's important to go through the different types of philosophies now and stress that there can be more than one that can influence why you might choose to invest in a company by buying stock.
Some classic investing philosophies include:
Value Philosophy
Fundamental Philosophy
Growth Philosophy
Socially Responsible Philosophy
Technical Philosophy
Contrarian Philosophy
Many Factors, Many Choices
An overall decision on why you might choose to invest in a company goes beyond your investing philosophies to encompass a multitude of factors. Ask kids to identify the most important factors that influenced their investment choices.
Are they concerned about Global Warming or the future of the world? Then they might be a Socially Responsible investor.
Did they have a favorite candy company that they want to see make bigger and better candies? They might be an investor with a keen eye for Growth.
Did anyone invest in something that isn't doing well now? They might be a Contrarian investor.
It's great to clarify that there are many philosophies beyond the ones we've reviewed here.
The most important part of any investing philosophy is the person behind the decision: YOU. It's all about what each investor wants to achieve and accomplish through their investment strategy.
What Kind of Future are You investing in?
Exercises like this that allow kids to imagine what they might like to do in the future is a key developmental strategy. It provides the foundation for focused goal-setting. FUTURES gives kids a solid framework within which to understand the complex world of investing. By providing many different exercises and opportunities for your kids to put themselves in that “future” world now helps jumpstart kids to develop their own investment philosophies, a key stepping stone to full financial literacy.
With the help of the Investing Strand and FUTURES, your kids will not only be able to understand the complicated world of stocks, they'll also begin to understand how they can start investing in their own future.
Visit Us Every Day in April
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.