Who Can Play and Win?
Before you get your hopes up, this is for our grandchildren only. However, perhaps this might be a helpful tool for you to use to teach your teens about investing. At the bottom of this post is a link to a Fidelity learning page for youth.
Criteria and Rewards
Our oldest three grandchildren are old enough to open and own a Fidelity Youth brokerage account with parental involvement. Cindie and I gave each granddaughter $2,000 to start their accounts. This was not just to give them money. Rather, it was my hope that they could learn by doing. Sometimes when we learn various bits of information, we have to wait a long time before we can put those bits into practice. If we see an immediate use for knowledge or skills we gain, we tend to have more focus and interest in the knowledge.
As a part of the gift, I spent time with each of the granddaughters to help them understand some basics about investing. They need to know that some investments are better than others. I wanted them to know some of the things I consider before I purchase a company’s stock or an ETF. To help make this even more compelling, I told them there would be a three-way contest. The contest starts now, and it will end on December 31, 2021. There will be a first-place, second place, and a third-place reward. The rewards will be cash deposited directly to their youth accounts.
I wrestled with the criteria to use to determine the winners. Of course, because there are three of them, and three places, they all win. But they have to do something to win. If they just buy good investments, and then do nothing, I suspect they won’t benefit as much. As a result, I am structuring the contest so that it has four parts. All four parts must be done to gain the reward.
Part One is Quality and Diversification
Buy investments with diversification and quality in mind. Whether or not the accounts are worth more than $2,000 or something less than that is immaterial. The market could go down, or some business sectors could suffer. I don’t want them making short-term decisions. This is worth 10% of the total score. Buy quality investments!
Part Two is Asking Good Questions
One of the three granddaughters impressed me recently as I provided some training recently. She was taking notes. She was asking questions. Of course, all three of them did this, but Noelle seemed even more energized and asked good questions. Questions mean the student is listening. As a result, I decided I would give a score for questions asked that showed both interest and understanding. This is worth 30% of the total score. I will be keeping track of the questions they text me or email me. I will probably answer their questions in my blog. In fact, my next post will be a response to eight questions from Noelle.
Part Three is Reading my Blog and Sharing Something With Me
I know they won’t have time to read everything I write, so I plan to let them know what to read that will be included in the contest. How will I know that they read the assigned posts? Simple! If they tell me one thing they learned, or that they were reminded of from previous training, that counts as completing the assignment. Even better, if they have a question related to the blog post, it will be counted as extra credit. This part is also worth 30% of the total score. There will never be more than one short reading assignment every week.
Part Four is Sending Me Their Monthly Statements
I don’t have access to their youth account statements. I can only see their UTMA accounts. I will award points for each PDF statement I receive for September, October, November, and December. This will help me with evaluating the Part One requirement to buy quality investments and to seek diversification. This is also worth 30%.
And the Prizes Are?
The goal is to make this a valuable experience in learning and applying knowledge with understanding and wisdom. I don’t want the rewards to minimize or devalue the work they will do to earn the rewards. Therefore, the first, second and third-place rewards will all be worthy of their time and energy.
1st: $1,000 added to the Fidelity Youth Account 2nd: $800 added to the Fidelity Youth Account and 3rd: $700 added to the Fidelity Youth Account. However, if there is no participation, there will be no rewards. You can’t just coast into second or third place.
These gifts are intended to be used to continue to invest in 2021. One thing I can say with certainty: I wish investing had been this easy when I was a teenager. It wasn’t. We are blessed to have the internet and some good tools for investing. If you start when you are young, you can see the power of investing early and you can avoid making costly mistakes when you are in your 20’s and 30’s.
Fidelity Has More Resources for Learning
“A lifetime of smart money decisions starts with education. So, we’ve created a library of jargon-free 101-level educational content to help teens understand complicated financial concepts. Your teen can find the Youth Learning Center in their app, or you can visit our Teens and Money page.”
A very good idea. My wife and I have talked about this kind of thing.
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