How to find a stock for your kids to invest in
— -- Q: My sons are interested in investing in Trader Joe's and Whole Foods, since we go there several times a week. How can they figure out if stock is available for these companies?
A: It's great to hear your kids are interested in investing. And you're right. It's often easiest to nurture young investors' curiosity by focusing on companies they know and patronize regularly.
Certainly, the grocery store is one of the first places young people encounter capitalism. They see products on the shelves, how they're marketed and sold. And both Trader Joe's and Whole Foods are known for their uniqueness, often selling products you can't find elsewhere, as well as personal service. These are excellent aspects of business for young people to observe and learn from.
Clearly, understanding whether a good company is a good stock is an entirely different discussion. And that discussion will get real ugly fast if you start talking about P-E and price-to-book ratios. There's nothing that will kill a young person's interest in investing faster than a mention of tangible book value.
That's why, in this case, you're right to stick with the basics. Your first stop for guiding your kids should be USATODAY.com's Money section. If you go to money.usatoday.com, there's a stock symbol lookup tool that will answer your questions.
At money.usatoday.com, just scroll down a bit to the Market Summary on the left-hand side of the page. There, you'll see a "Get a quote" blank with the words "Enter symbol(s) or Keywords."
In this blank, ask your kids to start entering the name of the company they want to learn more about. For instance, when you type "whole foods" a small green box will pop up pointing you to Whole Foods Market, ticker symbol wfmi. If you click on the Go button, you can learn all sorts of basic information about Whole Foods at USA TODAY's stock quote pages.
However, there are times you won't find a stock symbol. Usually, that means the company is privately held and not available for public investment. Trader Joe's falls into this category. The company is privately owned by a financial entity affiliated with the family that owns the German supermarket chain Aldi.
There's one more point to consider. A key aspect of investing that you might want to explain to your kids is how buying individual company stocks is riskier than owning a basket of stocks. Even stocks of good companies can fall and cost investors money.
Buying individual stocks is not a problem if you buy a few shares with money you figure you can afford to lose. But for long-term wealth building, it's possible to own pieces of hundreds of stocks, by buying a stock index mutual fund that invests in the Standard & Poor's 500 or an exchange-traded fund (ETF) that invests in the S&P 500. That way, your kids can own a piece of Whole Foods plus 499 other companies.
But again, you don't want to scare off a young investor. The art of saving and investing is one of the top lessons you can teach at this point.
Matt Krantz is a financial markets reporter at USA TODAY and author of Investing Online for Dummies. He answers a different reader question every weekday in his Ask Matt column at money.usatoday.com. To submit a question, e-mail Matt at mkrantz@usatoday.com. Click here to see previous Ask Matt columns. Follow Matt on Twitter at: twitter.com/mattkrantz