Junior's First Stock Investment Is the Gift That Really Will Keep on Giving

It's a fundamental point of The Motley Fool's philosophy that investing is a long-term enterprise. And it's a truism of parenting that we all want our children to do better than we did. So naturally, we view it as simple good sense to teach the youngsters about the joys -- and perils, because yes, there's no denying those -- of stock ownership as soon as possible.

It's for that reason that Motley Fool Answers co-hosts Robert Brokamp and Alison Southwick dedicated this episode to this topic, and invited TMF members Matt Banner and Brian Withers into the studio to talk about how they put their kids on the path to compound-growth prosperity. Even better, Banner's daughter, Emily, offers insights from the receiving end of all that parental wisdom. But first, it's a "What's Up, Bro?" segment focused on a troubling trend at the other end of the demographic spectrum: Bankruptcies among the elderly are rising at a fairly alarming rate.

A full transcript follows the video.

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This video was recorded on Aug. 21, 2018.

Alison Southwick: This is Motley Fool Answers! I'm Alison Southwick joined, as always, by Robert Brokamp, personal finance expert right here at The Motley Fool.

Robert Brokamp: Hello, Alison!

Southwick: In this week's episode we're joined by a few Motley Fool members with their stories on how they share the love of investing with their kids. And Bro is going to talk about the increase in retired Americans filing for bankruptcy.

Brokamp: Another good... Nah...

Southwick: Oh, that's going to be a downer. But it's important that we know this.

Brokamp: We should.

Southwick: All that and more on this week's episode of Motley Fool Answers.


Southwick: So, Bro, what's up?

Brokamp: Well, Alison, if you look at the typical metrics of an economy's well-being, we're doing pretty well, nowadays. Second quarter GDP came in at a healthy 4.1%, unemployment is at a very low 3.9%, and the stock market is up for the year so far.

Southwick: What do you know that I don't, Bro?

Brokamp: Nothing. Absolutely nothing. But not everyone is in good financial shape and one group that is at risk is a subset of senior citizens who have little room for economic error. That's one takeaway from a recent report entitled, Graying of U.S. Bankruptcy: Fallout from Life in a Risk Society. It's brought to us by four professors: Deborah Thorne, Pamela Foohey, Robert Lawless, and Katherine Porter and I'll just read a little bit from the abstract.

"Using data from the Consumer Bankruptcy Project, we find more than a two-fold increase in the rate at which older Americans [age 65 and over] file for bankruptcy and an almost five-fold increase in the percentage of older persons in the U.S. bankruptcy system."

But it's not necessarily an epidemic, so here's some of the stats. From February 2013 to November 2016 there were 3.6 bankruptcy filers per thousand people in the 65-74 age group. So 3.6 per thousand. But in 1991 that number was just 1.2 per thousand. It's the trajectory of the trend that is worrisome.

What are the causes? Well, according to a survey that was done for the report, about three in five said unmanageable medical expenses played a role and we've seen this in every age group.

Southwick: I could have told you that without even reading the report.

Brokamp: Right. A little more than two-thirds cited a drop in income. Many said bankruptcies came from helping others. A little more than one-third of the older filers said that they were helping either their children, or their parents, or other relatives. A big part of it nowadays is more and more parents and even grandparents are co-signing for kids' student loans.

Also, more people are entering their later years carrying debt. Roughly 41% of people in 2016 in that age group [65-74] had a mortgage and that's 41% compared to only 21% in 1989.

And one of the overall themes of the report is that part of this is just that risk has been sort of transferred over the last three decades. People are now more responsible for their own retirement savings in the 401(k) type of situation vs. a classic defined benefit plan. Out-of-pocket healthcare expenses have gone up. Fewer companies are offering retirees health insurance. So this whole collection of factors are what is driving this.

I have to say that whenever I hear a study like this, I'm a bit of a mixed mind. On the one hand, many people are in these situations through no fault of their own. When The New York Times (NYSE: NYT) wrote about this, they talked about a guy who was a carpenter. He became disabled when some equipment fell on him. Then he got Parkinson's. He wife got cancer. And he was getting health insurance from his union but then they dropped him. Like there's nothing that guy could have done about that and for someone like him, that's what bankruptcy is for. Like it's his last resort.

When The Washington Post wrote about it, they talked about a woman who's retired in her late '60s and is just living on Social Security. They didn't really say much else other than she had to rely on credit card debt and, at some point, it became unmanageable and she had to declare bankruptcy. In that situation there might be other stuff about her that wasn't in the article, but the bottom line is she probably shouldn't have retired. She's someone who probably should have kept working.

So in the report, you can definitely see that they're advocating for some societal changes. That government is really the only entity that can step in and take care of a lot of this. The thing is we don't know if and when that's going to happen. Obviously not everyone agrees with that. What should individuals do?

The first thing? I think what we have to do as a society is to accept that when it comes to retirement, 70 is the new 65. Most people should not really think about retiring until they're age 70. That's for economic reasons. But I've done a lot of reading, recently, about whether retirement is actually healthy for people and the evidence is basically mixed. There are definitely studies that have shown that for some people -- they look at a group of people -- and the people who retired earlier experienced more health issues. Greater risks of a heart attack and things like that. There are other studies that find the opposite. You may have heard about what they're now calling the epidemic of loneliness. It's a global phenomenon. The U.K. now has a minister of loneliness and it's more pronounced for older people because...

Southwick: It sounds like it's from Harry Potter. The minister of loneliness.

Brokamp: It affects all ages, but it particularly affects older people. For a lot of people their No. 1 social network comes through work. They leave work -- especially if they're not married and they don't have kids or they live far from their family -- and they're lonely. So there are lots of other reasons to consider working longer, as well.

For me, the bottom line is before you retire, you definitely need to get a professional opinion of whether you are ready, and you have to factor in some sort of cushion so that in case you are getting a pension that eventually gets cut, or you're getting health insurance from an old employer that gets eliminated, or you have health problems that you didn't expect; that kind of cushion has to be built into the plan.

So get that professional opinion whether you're financially able to retire, but also really think about whether you're emotionally able to retire and whether even working just part-time in your '70s is the right thing for you to do.


Brokamp: Time is the investor's best friend. The more time in the market, the more your stocks benefit from the miracle of compound growth. In other words, the sooner you start the more you'll potentially have, so with that in mind we welcome to the studio two Fools who have helped put their kids on the road to investment success: Matt Banner and Brian Withers and Matt's daughter, Emily. Welcome, guys!

Southwick: A bonus Fool!

Brokamp: A bonus Fool!

Southwick: Thanks, guys, for joining us! You can say, "Thanks, guys! We're glad to be here!"

Brian Withers: Thank you!

Matt Banner: Thanks! It's great to be here!

Southwick: Or not. Maybe it's not.

Brokamp: This is the worst thing ever!

Withers: Thanks, Bro!

Southwick: So it is FoolFest. You guys are here for FoolFest and while you're here we decided to have you come in and talk a little bit about how you guys both got your kids started in investing and then also see the results in person and hear straight from Emily how good of a job your parents did getting you started invested. You might get a grade here.

Banner: That would be good. I hope I pass.

Brokamp: Let's start, Matt and Brian, with your stories about how you started investing and how long you guys have been Fools.

Banner: I joined The Motley Fool in February of 1998.

Brokamp: Wow! A longtime Fool.

Banner: I've been around for a little while. I think The Motley Fool Investment Guide was the first investment-type book that I'd ever read and I guess I jumped the Kool-Aid and I've had a great experience meeting friends. Learning tons. Trying to share some of it with my kids. When Stock Advisor kicked off I joined that. Hidden Gems kicked off and I joined that.

Personally as a kid I always wanted to invest. I thought it was the coolest thing. I don't know how old I was but, at some point, I mentioned it to my dad and the comment was, "Well, you can lose money, too." And given that, I might have scraped together fifty bucks which would have covered the commission in those days.

Brokamp: Right.

Banner: So it's only really once the whole discount brokerage stuff popped up in the '90s that it was really possible to invest without having those commissions eat up most of your...

Brokamp: Having it go to a broker.

Banner: ... most of your investment. So when my daughters were born, we opened up UTMA UGMAs for both of them. We covered all savings accounts, as well, and never went the 529 plan route. We lived overseas at the time, so that wasn't really an option for us and I also always liked to do my own thing. I didn't want to just be stuck into whatever funds the 529 plan might have.

Withers: I joined The Fool in 2004 and my first service was Stock Advisor and soon added Rule Breakers after it. But I had been investing, I would call it, randomly and unsuccessfully prior to that. I was an IBM employee for a long time and participated in the stock purchase plan. Joined Dell in 1998, which got me kind of excited about stocks and what it could do, and there were Dellionaires all around.

Brokamp: I think that was the best-performing stock of the 1990s.

Withers: Yeah, certainly, and I joined after that, so my introduction to stock purchasing in 1998 through 2001 was I jumped on any tech stock that I was super excited about during the tech boom and bust there. Things like Dell, Cisco, Palm. Did anybody ever have any interaction...

Brokamp: I remember the PalmPilot.

Withers: The PalmPilot was a cool device, but the stock never really did anything.

Banner: I had both.

Withers: Yeah! That was one of the tragic stocks along my history. But part of the reason why I joined The Fool was this [lack of] success, and I'm not sure what I'm doing, and the Stock Advisor service was a, "Hey, these two stocks look great to us. We'll tell you when to sell. We'll keep you updated."

It has been a trusted partner for me ever since and kind of like Matt, I've just added services along the way. Joined Fool ONE in 2013 and just have really benefited personally along with my family and we'll talk about that a little bit later.

Southwick: We have in one of our conference rooms [a side note] that we have your member story.

Withers: Yes, we do. There's pictures of my kids when they were five and seven and the bike clock. It's lit up around it with lights that turn red when Netflix has a bad day and turn green when Netflix has a good day.

Banner: Lately it's been green.

Withers: Yeah!

Banner: It's been great!

Brokamp: Why don't you talk, a little bit Brian, about your kids and starting with their story, because they're a little older...

Withers: Yes.

Brokamp: You have two kids. Matt's already talked a little bit about the account, so why don't you talk about how you started with your kids and the accounts that you chose?

Withers: I started with my kids about the same time I started with The Motley Fool. It was one of those big light bulb moments that you mentioned in the beginning: the time in the market is the most important thing and not market timing. When I joined The Fool I was 37 and I was like, "Holy crap, I missed the boat." I love the saying, "The best time to plant a tree was 20 years ago. The next best time is right now," so I said I'm going to teach my kids. I want them to experience this before they're 37 and I pretty much gave them a 30-year head start on my experience.

One of the things that gave me this idea was David and Tom explained that at one point they were gifted some of their grandfather's money or portfolio. And it was in stock -- it wasn't in money -- and they were able to see things that had been held 20 and 30 years with a cost basis of under $5 that were $501 then and could see on paper the time value of money realized and what it really does. That's the experience that I wanted to create for my kids.

Somewhat unwillingly -- or I sprung it on them -- but at five and seven we sat down at the table and drew a big grid on one of these large pieces of construction paper into six squares. I drew a Dell logo. The golden arches. I took a Pikachu for Pokémon and put it on one of the squares. Buzz Lightyear for Pixar. And they took a set of pennies that I gave them, and they put pennies on the squares, and that's how we invested their money. So they've picked their stocks from the beginning. As far as accounts, I opened up UGMA accounts for them, as well. That way I felt like the money was in their name and it was their account, and they picked the stocks from the beginning. I wanted to see them succeed or fail based on their picks.

Southwick: When you were explaining investing to them from an early age you said, "I'm going to give you some pennies and you're going to set these down." But what did you explain to them before they set down the pennies?

Withers: This was, "What do you feel about the companies and how do you like them as a customer, potentially? What does it mean to you?" I talked about being a part owner. I don't think at five and seven that really resonated with them, but one of their large holdings is Chipotle and they both really love [it]. I call my kids the "Burrito Boys."

We literally visited Chipotle more than 100 times last year -- through the crisis -- whatever. We've never gotten sick, they're huge fans, and that's a super easy business to explain. You've got a shop. You've got to pay the employees. You have throughput. The more throughput, the more money.

It was really neat. I remember one day [and you've got to take these moments when they happen] we were at Chipotle. My son Zack said, "How does Chipotle make money?" and I'm like, "Wow!"

Southwick: Here we go!

Withers: Don't screw this up! How long do I have before the eyes start rolling in the back of their heads? That was a fun little discussion.

Brokamp: Matt, why don't you talk a little bit about how old your kids were when you started and how the stocks were chosen.

Banner: Investing is probably my only real hobby and about the only thing I'm doing when I'm not doing chores and whatever has to be done around the house is I'm reading Fool discussion boards. I'm doing stuff in Quicken, or spreadsheets, or whatever.

At some point [and I think it was 2011] Emily said, "So, what is this that you're doing?" So we talked a little bit about the idea of companies and buying a stake in them. I asked her to think of companies that she was familiar with. I think you still have that list, don't you?

Emily Banner: Somewhere, yeah.

Banner: She was very focused on physical presence. You had like Costco, and Jo-Ann's, and Target, and supermarkets, and places that we go to every day. I was trying to then get her to step back a little bit and think about things that you use, and not necessarily places you go. And I was thinking, we use the computer. We google things.

But she was like, "Electricity!" And I'm like, "Ugh, I do not want to talk about utilities. I am not comfortable with utilities." And that was the one that she said, "Well, let's look at it." We actually pulled up some financial statements. This is probably 2011, so you're maybe six or six-and-a-half years old. And we did some really basic stuff like this is what a market cap is. I think we might have talked about dividends or something.

Then everything fizzled a little bit. We didn't go anywhere. Life gets in the way.

Southwick: She was six years old... so I'm having a hard time...

Banner: Life got busy or whatever. But back in the day Tom used to do his quarterly Everlasting picks live with a studio audience if you were at Fool Headquarters, so for the October picks I said, "Emily, do you want to go with me to Fool Headquarters and we'll see the great unveiling?" She thought that sounded like fun and I laid out a few ground rules. I bought her a notebook.

Southwick: Oh! It's here!

Brokamp: She just held it up.

Banner: She's been taking notes this morning at FoolFest. You need to write down each of the companies that Tom talks about and some bullets about why he thinks they're good investments. And then my plan [and we've done it mostly well] is that every quarter when those Everlasting picks come out, I give them to the girls and I allocate $500 for them to buy shares. In addition to picking out the companies, they have to figure out how many shares they can buy and rolling in whatever dividends they've been paid out in the meantime.

So for that first pick she was sitting right in the front row taking amazing notes and even afterwards...

E. Banner: And making lots of spelling errors. I'm looking at it right now.

Southwick: You're like, "I was so young and so foolish the mistakes I made back then all those years ago."

Banner: Which stock did you pick?

E. Banner: Facebook.

Banner: Facebook.It's been a good pick. I guess one other memory of that day here at The Fool is afterwards [and this is out in the round space at the end]...

Brokamp: The rotunda?

Banner: The rotunda, yes.

Brokamp: Or the Brotunda, as I like to call it.

Banner: Brotunda. Very good.

Southwick: Nobody calls it that.

Brokamp: Except I.

Banner: Only Bro. There were maybe like 30 or 40 people there. It wasn't a huge crowd. At some point I was talking with Jim Mueller and I look over and Emily's talking with David. And David's down like straight eye level. He's crouched down. They're off at the side having this great conversation. Later I asked, "So, what did you and David talk about?"

"Oh, things."

I'm thinking it's probably like the next amazing stock pick. Here's your opportunity.

Brokamp: Did you get a good stock pick, Emily, from David? Do you remember?

E. Banner: I do not remember.

Southwick: Not worth putting in the notebook, apparently. You didn't make the cut.

Banner: So when we got home that day her other job was to brief her sister, who in 2012 would have been just over five, so that Felicity could make a decision, as well. I was very clear that Emily wasn't allowed to say what she picked because I didn't want her to color [her sister's opinion]. What were the reasons that you wanted to buy Facebook shares? Of course you have them written down.

Southwick: In the notebook. You've got your investing journal.

E. Banner: It's a worldwide company. A company -- I still spelled "world" with an "u" then. That was annoying. Has over a million users. 600 million? Thousand? Something like that. Log on to Facebook every day. People pay Facebook to show ads on Facebook. Tom thinks that Facebook will be the largest company in the world in 10 years.

Banner: We'll have to follow up on that.

E. Banner: Yeah, we will.

Banner: So at dinner that night Emily shared everything with Felicity and Felicity chose Cognizant. I asked why and she said, "I like the word, or the way it sounds," or something like that. And I said, "That's totally cool. I need you to write it down." And just this morning at breakfast I was talking with fellow Fools and this came up. "Yeah, well, I try to write better reasons, now."

So the notebooks have been a big thing. It's one of those definitely do as I say and not as I do because I'm not quite as organized about documenting everything in a journal. I have spreadsheets and Word documents and stuff littered all over the place. So every quarter they do that. They buy their shares and we enter them into a scorecard on The Fool so they can track that.

Again, sometimes life gets in the way, so coming to FoolFest I know they both said they wanted to come. I said, "OK, well, we haven't done the January picks yet. We haven't done the April picks, yet. A prerequisite for us going is we've got to get caught up because people are going to want to know what you've picked and what you're interested in."

Southwick: And you guys actually came to Foolapalooza?

Banner: Yes. You invited us to that.

Southwick: So you guys were here at Foolapalooza and Emily you were upfront on stage and you were getting interviewed along with your dad. I forget. They were asking you questions that were quite hard about how you invest, and your investing philosophy, and you were nailing them. You were doing such a great job and everyone in the audience was like, "Yes! She's the best!"

E. Banner: I'm pretty sure we had gone over the questions beforehand. So, that helped.

Brokamp: Still very impressive.

Southwick: You crushed it. Everyone was so impressed. You must be so proud.

Banner: Yes. It's been a fun...

Withers: Matt's turning red now.

Banner: I'm excited that they're interested in it because, again, they've got so much time to do this. When we opened the UTMAs, we contributed as much as we could afford for a long time. Although the intent, obviously, is for college, technically there is nothing that requires it to be used for college. I'd been thinking for some time before we started this about how I start that transition for them to take some ownership of this so that it's not just at 18 years old and "Tada, we can do this, that, and the other thing."

Southwick: I'm going to cash out so I can go buy a beater car.

Banner: I can go buy a house and a car.

Southwick: I'm going to go make some bad decisions with all this money. No, Emily's not going to do that.

Banner: Go party.

Southwick: No, Emily's not going to do that. Emily's too smart for that.

Banner: Also I think we talked about this. I think around Foolapalooza, I met with one of the financial advisors to get a grounding on where we were at with everything and he asked Emily, "Do you play any sports?" Scholarships are a possibility.

E. Banner: No sports. Not happening.

Brokamp: But music. Lots of good music.

E. Banner: Lots of music.

Withers: But every university needs a bassoon.

Brokamp: That's right.

Banner: Or four.

Southwick: Is that why you strategically chose bassoon, because there are just too many people playing the flute out there?

E. Banner: No, I chose because the bassoon teacher at music school had a group that would play outside the piano lesson room, so when I was waiting for my sister's music lesson, I would be sitting in that room doing homework and they'd be playing. "Come over to the dark side, Emily. We have bassoons."

Banner: She's on the dark side.

E. Banner: So I finally joined the dark side.

Banner: The knowledge that, "Wow, I'm successful in something else and I can save that money for something else. I can pay for college another way." Kind of my way to get them to gradually transition that ownership over to them.

Brokamp: Brian, your kids are a little older and they are reaching the age of majority.

Withers: They are.

Brokamp: Do you have any rules about what they can use the money for or is it dedicated to college?

Withers: No, it's not dedicated to college. When I had originally set it up, my thought was that when they got to the age that they could take over the account, I hoped that through the 12-plus years or whatever that we've been talking that they would see the value of investing and continue to hold if they needed to. And the idea was similar to Matt -- to put in a certain amount over time and then I calculated what it would take to have $1 million when they were 60 and back-calculated that into how much we put in over time.

My kids are now 19 and 21. The age of majority in New Jersey is 21. The cool thing is [and I called Fidelity in a little bit of a panic when Alex was 20 and a half and said, "OK, what's going to happen? Do I just lose the keys?"]

Banner: What does happen?

Withers: Do I lose visibility? It was a wonderful conversation and I think you'll be very happy about how it works at least at Fidelity and I encourage you to talk to your brokerage and whoever holds the account.

I have to turn the keys over, so I have to call them and say, "It's time. Flip the switch." And what's nice is after Alex turned 18, it automatically showed up. We got him a checking account because he was getting a job and needed some place to put it. Then all of a sudden, his brokerage account showed up where he could see it.

I've been very open about how much they've had over time and we've talked about spiffy-pops and 10-baggers and they've had wonderful stock picks over the years. Now that it was in there when he logged in, he could see it. And what's been super cool is we were putting it in for the time before they were in college and once Alex got into college and we said, "Well, the funding's going to stop for the UGMA at that point, because we're paying for college." The idea was you get the momentum started and then for four years it sits on cruise control, which has been absolutely wonderful and their accounts have pretty much doubled in the last four years.

Alex calls me every once in a while and goes, "Dad, the stock keeps going up." I'm like, "Yeah, that's a good thing." And it's been nice because he hasn't done anything. He can't touch it, but he can see it. That's been a special experience. Our mental hurdle that the kids have to go over [and we may have to be a little more objective about it] is we want you to get to the point where you don't need the money. I think that's one of the most important things in investing.

And going back to the five and seven-year-old it sounds like that was the same time you did, too, Matt. Some people talk to me and say, "Well, that's too young." The kids are very aware of brands at that age and have certain preferences. We made the mistake, around that age, of giving the kids a Nintendo Game Boy Color because we thought that would help them read.

That was like the dumbest parent decision ever. They're not seen without a device ever anymore. My hope is that he graduates from college, gets a job, finds a place to live, and then maybe after he's settled in for a year and is not in debt and the debt mongers aren't after him that we could turn the keys over and, "Here you go!"

Brokamp: Emily, tell us a little bit more about your experience being an investor. Any other stocks that you've picked? Anything else you've learned along the way?

E. Banner: Occasionally I would pick a stock from Tom's quarterly picks that was too expensive for me to buy from what was deposited, and then I would choose to save the money and either use it the next time to buy that stock or use it the next time to buy a different stock that I chose the next quarter. That was a stock that I thought was more interesting, but then I had to choose between the two winners the next quarter and that was kind of hard sometimes.

Withers: We actually faced that early on. If you're dealing with $500 a quarter or however, we did our picks annually for probably the first 10 years, maybe. That helped group a bunch of money together. And at the time I remember Stock Advisor would do their "summer summary," and they'd do every single stock, and it was about six or eight pages of stock picks and a little bit about each one, so the kids would just go through and write their initials on them. Then we'd pick from that.

I think the other key is Emily was picking from a vetted set of Motley Fool recommendations, kind of the same with my kids, and that has turned out, like I said, as a tremendous portfolio because we've bought and it's just sat there.

The kids' portfolio has [and this comes with a little asterisk that says your results might vary so don't expect these kinds of things] a 19% return since 2004...

Brokamp: Annualized?

Withers: Annualized. Stocks that are top in their portfolio are Netflix, Amazon, Apple, Chipotle, and Activision and part of me investing with the kids is one of the things I have a tendency to do more often is fiddle with the portfolio. I'll sell a little bit of this and I'll buy a little more of that. I'll sell out of that because I don't believe in it anymore.

And the kids' portfolio we've pretty much just bought and let it sit. A thing goes bankrupt, no worries. The kids own -- I don't know if anybody has heard of 3D Systems. That's ranked 21 on their list and it's down 60%. But the overall portfolio, and I think that's the beauty of the math in compound interest -- is that the top stocks that have done well over the 14 years that they've had the portfolio more than overwhelmed a couple of lousy picks.

Banner: When Emily and Felicity pick out their picks, there's two things that they have to tell me about. One is why they want to pick that. It can just be a sentence or so. And the other one is how they make their money which, again, shouldn't be a dissertation. It's coming back to [I don't remember who said it] you should be able to write with a crayon what the business case of this business is. So distilling stuff down to that level, even for me, I think is good. Brian, you said at one point that your kids were trumping your accounts...

Withers: They still are.

Banner: I personally have learned a few lessons along the way, too, where between school and work when they do place their orders, it's after market hours so they're putting in a limit order to go in the next day. They'll frequently take whatever the midpoint is from Monday, trade, forget about it, and usually it goes through the next day. I'll say, "You're the proud owner of most recently Appian and Atlassian."

But personally, the number of times that I've done trades have been like, "Wow! I know that's a pretty volatile stock, so I'm going to go down a little bit lower."

Brokamp: Put the limit in a little lower.

Banner: Right. Because probably it will bounce around a little bit. I'll get it right. That's why I didn't buy Tesla at $33 although it was really volatile for however many weeks between $32 and whatever. The day that I entered my $33 limit order it hasn't seen that ever since again.

Brokamp: So you missed out.

Banner: It was like, "Ugh!" I remember on a few occasions biting my tongue a little bit as they picked what their price was going to be for their limit order and thinking, "Oh, you could probably get that for $2 less," but does it matter that they get it for $2 less when they're not going to see or touch those shares for 15 years? It doesn't matter at all.

Withers: My kids have done exactly the same thing. I remember around 2011 Netflix had skyrocketed up and was almost at $200 and I was selling Netflix. I had made a tremendous amount of gains. And in the summer issue, the kids were like, "Let's buy Netflix."

I'm like, "At $200 you're going to buy Netflix?" And it's 7 for 1 split, so it's probably under $30 now. I'm sure it's one of their 10-baggers in the list of 10-baggers that they have. It's their portfolio and it's their picks and I tried to hold my tongue and it's been a wonderful experience.

Southwick: For the better.

Withers: Absolutely. Totally.

Brokamp: One more question. Let's say it's 10 or 15 years down the road and you're going to start helping your grandkids learn how to invest. Anything you would do differently this time around? Or have you been absolutely perfect? It sounds like you guys have done a good job.

Banner: There's always room for improvement. It's probably fair to say [and I don't think Felicity, who's not here to protect herself, but I don't think she would disagree] is Emily has typically been more engaged with it. Even as a seven-year-old she was more engaged than Felicity was when Felicity was a seven-year-old. And even now, Felicity is 10. I think Emily was more engaged at 10 than Felicity is.

Coming back to Brian's comment earlier about when the eyes are going to roll in the back of the head when they ask you a question, I think in the earlier days I probably did a little bit more. For every one of the five companies, I wanted them to pull out some bullets about each of them and write them all down in their notebooks.

E. Banner: I still do.

Banner: And Emily does and Felicity doesn't. Now it's a little bit more of reading something and then write down bullets about the one that they picked just to make it a little bit more bite-sized, because before it would take an hour to go through, which isn't the end of the world. We'd sit on the sofa and go through the stuff; but trying to bring it down to slightly more bite-sized nuggets because I've definitely gotten eye-rolling in the back of the head. Not the "whatever!" eye-rolling, but the "OK, I've just lost it" chest rolling.

Withers: I would jump on the thing that Matt says. We didn't keep the journal. We didn't write down why. But the other piece that I think is an important concept that I missed is one, it was all Mom and Dad's money. I've heard people do the Grandpa match and stuff like that. To encourage the kids to set aside whatever money they have [Christmas, birthday money, allowance and whatnot] and then I would do a 2-for-1 match on that to have them feel even more invested. That they're participating and it was their money.

I think that because I made a big deal about it's their picks, I think they feel [more] ownership, but I think that would even have taken it a little further.

Banner: That's actually a deal that we have with our little investing plan. I can count on one finger the number of times...

E. Banner: I've done it a couple of times.

Banner: I think it's once. It hasn't borne fruit, but I was...

E. Banner: I don't really remember about it.

Banner: But I think that's a great idea, is having that personal investing.

Brokamp: The matching program.

Withers: And it doesn't have to be in the beginning, because when they're four and six they're not very employable. So maybe over time that would be something. My younger son has a job and we're talking about a Roth. That would be one where hopefully I can get him to put some money aside and make his own picks.

Banner: That's something I've always intended is that when the earned income shows up that I will absolutely match. I don't think I'd go quite 100% but match a very substantial amount, especially in those first years. "You're going to get 80%," or something so that you are making some contribution yourself but, by the same token, if you've got any earned income at 16, 17, or 18; the fact that you're starting a Roth at that point that you're not going to touch for 50 or 60 years is going to be phenomenal.

Withers: I'd like to make an important point here, too. You know on the airplanes when the masks come down and they say, "As an adult put your mask on first." All this investing with the kids' stuff doesn't happen until your own financial situation is in order. If you're in credit card debt or spending more money than you earn, this is not an option. You need to get your house in order first.

I remember I had set up a UGMA account a few years prior to this and it just wasn't time for us. We weren't ready. The kids were too young. I ended up closing it. I remember calling the Fidelity guy and he goes, "You know, you have to use this money for the kids' benefit."

I'm like, "Oh, yeah. Can you say diapers?" So there's a time to do it, and I think it's very important Matt and I chose to invest with our kids. That's a very different experience and thought process than when you're investing for your kids. It's been much more enriching for us.

Banner: Partly related to that -- an enriching idea -- is that we have some phenomenal dinner conversations. Chris Hill's news fairy shows up and all the Chipotle stuff. That's been an interesting thing that's come up. Or some of the Tesla stuff. And the fact that the kids own shares in these companies. Talking about Zuckerberg's briefing before Congress.

E. Banner: That was a good idea. I heard it and went, "Huh!"

Banner: There's some connectivity there.

Brokamp: I own part of that company.

E. Banner: Exactly.

Withers: Don't screw it up, Mark!

Banner: It's fun when it comes full circle. It's not just something that you spend 15 minutes or an hour on once a quarter or once a year. It creeps in everywhere and makes life interesting.

Brokamp: Well, this has been fabulous. Thank you very much for joining us, guys.

Southwick: Yeah!

Banner: Thanks for having us.

Withers: It's been wonderful.

Southwick: And Emily, if I can get you to read our disclosure for the show, that'd be great.

E. Banner: As always, The Motley Fool may have formal recommendations for or against the stocks we talk about here on the show. Don't buy or sell stocks based solely on what you heard here.

Banner: Socks or stocks?

E. Banner: Stocks!

Brokamp: Or socks.

E. Banner: Did I say socks?

Brokamp: I own some pretty good guitar socks.

Withers: Don't buy Bro's socks!

E. Banner: Go ahead and buy socks!


Southwick: Well, Bro, the postcards just keep on coming!

Brokamp: Yay!

Southwick: Yay! It's so exciting. So Todd sent us a couple of postcards from Utah. Here's one with lovely scenes of Utah...

Brokamp: People love Utah.

Southwick: ... and then he also went to Temple Square and he recommends going there to learn all about the Mormons. I have been there a couple of times in my life. Melanie went to Sonoma and Hoover Dam, which apparently has lovely art deco bathrooms.

Brokamp: Really?

Southwick: Yeah.

Brokamp: I've been there, but I don't remember that.

Southwick: You didn't get nosy and start walking into places you shouldn't. Brian sent us a card from the exotic Rocky Mountains. And this is so cute. Team [Foolarado] sent us a postcard from Denver and it's signed by everyone over in The Foolarado office.

Brokamp: Oh, that is really cool!

Southwick: So thanks to Mona for organizing that!

Brokamp: We love Mona!

Southwick: We do love Mona! Elise sent us our first postcard from Maine. Old Orchard Beach. Says, "Love the show." Melissa went hiking with the Camels of the Cloud, aka Llamas in Montana. Rich Smith sent us a card from San Antonio. He's just running all over Texas these days. Bob and Julie are having a lovely 30-day cruise. And look at this handwriting.

Brokamp: Oh, my gosh!

Southwick: Gorgeous, perfect handwriting. They're on a 30-day cruise. It goes to Sydney, Tahiti, New Zealand, Fiji, Tonga, Bora Bora, and a bunch of other amazing places and they sent this postcard from Hobbiton. I guess that's how you would say it. Where they shot the Lord of the Rings movie. Like it's Hobbit Homes.

Brokamp: Oh, that's so fun. Wow, those are still there? That's cool.

Southwick: I'm going to turn it into a tourist attraction. When we went to Malta, they had turned the set for the Popeye movie starring...

Brokamp: Robin Williams?

Southwick: Robin Williams. That set is now a tourist attraction in Malta.

Brokamp: Are you kidding me?

Rick Engdahl: I totally want to go to Hobbiton. It's on my bucket list.

Southwick: Yeah! Well, I hope we get more postcards from Bob and Julie, because, again, lovely handwriting. And they're going to some amazing countries, so maybe you need to go on this same cruise that they're doing.

Engdahl: Maybe. I'll check it out.

Southwick: Well, that's the show. Bro, we did it again. Can you believe it?

Brokamp: We did!

Southwick: Can you believe it? If you want to send us a postcard, our address is 2000 Duke Street, Alexandria, VA 22314. If you have a question for the show, our address is Answers@Fool.com. You can also follow us on Twitter and there's also a Motley Fool Podcast Facebook group if you want to hang out and talk about stocks and stuff.

And, you know what? Another highlight of my week...

Brokamp: What was that, Alison?

Southwick: This is a super long, crazy... It's not even that good of a story, but I'm just going to tell it, so Rick can use the song because we all want to hear it. So, you know Raffi, the children's performer?

Brokamp: Oh, I do. Not personally.

Southwick: Not personally. He wrote the song Baby Beluga. Anyway, he posted on Twitter, "Hey, here's the place where we taped Baby Beluga." By the way, the same producer on it was Daniel Lanois, his brother. And Daniel Lanois was the same producer on Peter Gabriel's So and U2's The Joshua Tree. He's legit.

I was like, "Oh, my God, it's on Twitter. I wonder why that is? That's crazy!" The same producer of The Joshua Tree was the producer on Baby Beluga. And Raffi retweeted it.

Brokamp: Whoa! Highlight of the year!

Southwick: I geeked out so hard. Like Baby Beluga is the first song Hanna ever sang on her own. She was like two years old, and we were on vacation, and she kept saying, "Baby goo gah" over and over again, and eventually I was like, "You know, I think she's singing Baby Beluga." When we got back home, I go to day care and I'm like, "Is Hanna singing Baby Beluga?" And they were like, "Oh, yeah, probably." So it's been an emotional week for me and Hanna. She had her first day of kindergarten. Maybe that's why I flipped out over Raffi.


Engdahl: I got retweeted by Hamill himself.

Brokamp: What?

Southwick: Mark Hamill?

Engdahl: Yeah. I think I showed you. It was when I sent him the picture of my kids dressed as Luke and Leia.

Southwick: Oh, cute! Oh! Ach! He's really good on Twitter, too!

Engdahl: He is. He's great!

Southwick: Has anyone famous retweeted you, Robert Brokamp?

Brokamp: One of my favorite podcast co hosts, Alison Southwick. I think she did once.

Southwick: Wow! That must have been a very special day!

Brokamp: It was a highlight!

Southwick: Anyway, thank you for letting me geek out over Raffi retweeting me. It was a very proud moment. Anyway. The show is edited BabyBeluga-ing-ly by Rick Engdahl. For Robert...

Engdahl: That was a lot of work.

Southwick: It was. For Robert Brokamp, I'm Alison Southwick. Stay Foolish, everybody!

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Alison Southwick owns shares of COST. Brian Withers owns shares of DDD, ATVI, AMZN, APPN, AAPL, TEAM, CMG, NFLX, TGT, TSLA, and TWTR. Rick Engdahl owns shares of ATVI, AMZN, AAPL, CMG, COST, FB, NFLX, TSLA, and NYT. Robert Brokamp, CFP owns shares of CTSH, FB, and TSLA. The Motley Fool owns shares of and recommends ATVI, AMZN, APPN, AAPL, TEAM, CMG, CTSH, FB, NFLX, TSLA, and TWTR. The Motley Fool has the following options: long January 2020 $150 calls on AAPL and short January 2020 $155 calls on AAPL. The Motley Fool recommends DDD, COST, and NYT. The Motley Fool has a disclosure policy.