||January 30, 2000|
Personal Finance / Susan Carpenter:
Teen-agers find investing is kid's stuff
By SUSAN CARPENTER
Los Angeles Times
DAVID LEUNG was 10 when, as a reward for good grades, his parents began a yearly tradition of giving him 100 shares of stock. Seven years later, his portfolio is worth about $500,000.
A math whiz and aspiring computer scientist, Leung bought into a company he thought showed promise - Microsoft. Since then, he's put almost every dollar he's earned from part-time work into his portfolio, which includes a few other select stocks.
Now he is helping teach other teens and twentysomethings about investment through two Web sites, Investing for Kids (http://library.thinkquest.org/3096), which he founded at age 13, and Invest Smart (http://library.thinkquest.org/10326 ), a site that teaches money management skills and includes a real-time stock investment game used in more than 9,000 schools nationwide.
``The goal was just to teach other youngsters the concepts of saving and investing and not wasting all their money,'' says Leung, a senior at nearby Palos Verdes Peninsula High who hopes to attend Stanford or the Massachusetts Institute of Technology in the fall.
The primary concept he teaches is simple, if elusive, to more consumer-oriented kids his age: Spend less to have money to invest.
``It doesn't matter how much you save,'' he says, ``as long as you get in the habit.''
Leung puts his money where his mouth is. He works part time as a programming consultant to an e-commerce Web site and invests everything he makes. All of it.
``I don't really see that many movies. I don't really buy any clothes. I just do stuff like tennis that doesn't cost money,'' he says.
And he encourages other teen-agers to do the same. Instead of spending money at the movies or in the mall, Leung suggests they ``give up the night out'' and ``buy clothes on sale.'' Instead of gifts, ask for cash, he advises.
``Say your parents got you Nike stock instead of Nike shoes,'' he says. ``Your money would have tripled in the Nike stock, whereas your shoes really aren't worth that much anymore.''
Leung believes you're never too young to start planning for the future. It's a refrain he often hears from people who say they wish they had known about his Web site and started investing earlier. And it's a message that is reaching more and more teens.
Invest Smart receives 1 million hits daily. Hosted by Think Quest, an organization that promotes Internet-based learning, the site is so popular that it repeatedly crashed the server, prompting the company to upgrade recently.
Before the advent of the Internet, most kids knew little about the stock market. But the Web is providing a wealth of information about stocks to increasing numbers of kids, through online investment games such as David's and other sites.
``(The Internet) is certainly giving kids who are interested a lot more exposure to the market,'' says Janet Bodnar, senior editor of Kiplinger's Personal Finance magazine and author of ``Dollars & Sense for Kids'' (Kiplinger Books, 1999). ``It's a lot easier to find information on stocks, and because kids tend to go online a lot, there's just a lot more available to them.''
While kids cannot own stocks outright until they are 18, through custodial accounts they can invest and trade stocks without the custodian having to approve of each transaction.
Some people in the industry believe that the Internet not only is fostering teens' knowledge of the stock market but also may be encouraging them to invest.
Ginger Thomson, founder and CEO of San Francisco-based DoughNet.com, a money management Web site for teens, estimates that at least 2 million teen-agers today are investing, both online and through traditional means. In addition to online banking, the site provides information on donating to charities and a link to StockPoint.com (www.stockpoint.com), a site with information about stock values. Thomson says 15 percent of her site's visitors link to StockPoint.com and that this percentage is consistent with reports on the number of teens currently investing in the stock market.
``The bar has dropped to who can invest,'' she says. ``You don't have to be wealthy to invest. You can open a relatively small bank account and access it easily.
``What we've found is that kids who invest are pretty curious to understand the business they're investing in,'' Thomson says. ``They can tell you more than a broker probably could.''
Susan Carpenter writes for the Los Angeles Times.
(c) 2000, Los Angeles Times
David Leung's Top Tips
1. Save as much money as
5. Don't panic and sell stocks at a loss unless there is some change in the company's fundamentals, ``because if the company was good when you bought it and the fundamentals are still good, chances are it'll go back up.''