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A common regret of many investors is that they wish they had begun investing earlier in their life. Getting started while you're young allows the power of compound growth to produce amazing results. But while we, ourselves, can't turn back the clock, we can certainly give our children a financial leg up in life by teaching them to invest while they're young.
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With so many investment choices available to us, where should we begin? We asked a team of Motley Fool contributors to give us their best stock idea to help you introduce your kids to investing. Find out below why we think Nike , Disney , Apple , Facebook , and Alphabet could make great stocks for beginning investors.
:Nike'sjust-do-it attitude is the perfect one to embrace when it comes to getting started investing, establishing retirement plans, and utilizing portfolio-pumping strategies like dollar-cost averaging -- i.e., investing a set amount at specific intervals, such as monthly. Its stock may also be perfect for getting and keeping young'uns interested in investing.
Nike's legendary innovation in athletic apparel has made it a de facto industry standard with billions of dollars in sales and profit. And its deep-pocketed marketing budget means that its goods are touted by some of the most famous athletes in the world, including basketball's Kobe Bryant and legend Michael Jordan.
In addition to being a highly recognizable brand worn by kids like your own, Nike also has the advantage of having been a great investment. The company has doubled its sales and nearly tripled its earningsin the past 10 years, and that's led to a 478% shareholder return since 2004. Obviously, there's no guarantee that Nike's winning streak will continue, but its top-tier brand and proven track record suggest it has what it takes for burgeoning investors.
: One of the hardest challenges that parents face when trying to get their children interested in investing is to make the topic fun and engaging, so I almost always suggest that parents start with Disney. The company offers a broad appeal to the young and old that make it a great choice for a first stock.
Are your kids young? I'm sure you can talk to your kids for hours about its Pixar movie studio films and multiple Disney channels. Are they teenagers? Perhaps they can take an interest in learning more about the superhero movies made by Marvel, the next Star Wars movie by Lucasfilms, or the terrific sports programming provided by ESPN. You can also get them excited by doing on-site research at one of its theme parks or cruise ships.
Disney's huge breadth of properties and dominant brands should keep the House of Mouse rolling in cash for decades to come, and you can bet that it will continue to raise its modest dividend, and its generous share buyback program will be there to reward long-term shareholders. With Disney sharestrading at a discount, now might be a great time to pick up a few and let the compounding begin.
Selena Maranjian:When choosing stocks for a young person's first portfolio, it's good to seek companies that they're already familiar with and ones they'll enjoy following. The companies should present good values, too, because a significantly overvalued stock is likely to fall in value, which isn't likely to foster an appreciation for or love of investing. My submission for your consideration isApple.
Your young one probably knows this company well, thanks to its ubiquitous offerings such as iPhones and iPads. Apple keeps coming out with new products (heck, it has even created new product categories!) and improved versions of its existing ones, and thereby keeps interest and excitement high. Its iPhone 6 debuted with a plus-size screen available, for example, as well as an even better camera than its predecessor, and a 6s or 7 model is expected to debut in September, with additional new features, such as, perhaps, Force Touch capability. Meanwhile, new offerings include the Apple Watch and Apple Pay.
The stock seems appealingly priced, with current and forward-looking P/E ratios in the low teens. It even offers a dividend that recently yielded a solid 1.8%, and that payout has increased by 11% over the past year. Young people learning about profit margins will like its net margins north of 20%.
Best of all, for new students of the business world, Apple offers a relatively long and lesson-filled history, featuring flops such as the Lisa PC and the Newton tablet and a low and sinking market share. Along with that is a very impressive turnaround, leaving it currently as America's most highly valued company. Shares of Apple are likely to reward young investors for many years, in many ways.
Tim Brugger:I too like the notion of introducing kids to investing by finding stocks that are familiar and offer long-term growth opportunity. With that in mind, Facebook hits the mark on both fronts.
As of last quarter, Facebook boasted just shyof1.5 billion monthly average users. That already-impressive figure is even more incredible considering all those MAUs account for nearly have the connecteduserson the planet. Safe to say, even if your child isn't an active Facebook user, she's likely familiar with it or one of its many properties including Instagram, WhatsApp, Messenger, and the Oculus Rift virtual reality solution. Facebook certainly meets the first criteria: familiarity.
On the long-term growth front, Facebook is also a great stock for first-time investors. Revenue climbed again last quarter by 39%, vaulting Facebook past its first-ever $4 billion-plus quarter. Better still, Q2's strong revenue came as high-priced video spots are just beginning to take hold. And with Facebook's decision to monetize Instagram, shareholders can expect it to also bolster top-line results before long.
Now, toss in the eventual monetization of WhatsApp, Messenger, and Oculus Rift and it's safe to say Facebook's run of strong quarters will remain intact for several years. Combined with its incredible popularity among young and old alike, Facebook should make a short list of the best stocks to introduce kids to investing.
:You'd be hard-pressed to find a more appropriately named investment for your child thanAlphabet, the company formerly known as Google. Beyond the name, however, there's a lot to like about the company's long-term prospects.
Your kids are likely familiar with Alphabet's core business: search and all of its related advertising revenue streams. Currently, the website is the most often visited in the world, has a 70% global market share on desktop, and a 92% share on mobile devices, according toNet Marketshare. That's thanks in large part to the fact that 81% of the world's smartphones run on Google's Android operating system, according toIDC.
But the company isn't resting on its laurels. By breaking out ancillary businesses under the Alphabet umbrella, your kids will gain exposure to the types of technology -- self-driving cars, contact lenses that test insulin levels, and a fiber network of Internet connectivity -- that could very well be commonplace when they reach your age.
The article The 5 Best Stocks to Introduce a Kid to Investing originally appeared on Fool.com.
Brian Feroldiand Selena Maranjianown shares of Apple, Facebook, Google (A shares and C shares), and Walt Disney. Brian Stoffel owns shares of Apple, Facebook, and Google (A and C shares).Tim Brugger owns shares of Walt Disney. Todd Campbell has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Apple, Facebook, Google (A and C shares), Nike, and Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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