LOS ANGELES -- 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 teen-agers 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 high school senior 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 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
Invest Smart receives 1 million hits daily.
Hosted by Think Quest, an organization that promotes Internet-based
learning, the site is so popular it repeatedly crashed the server,
prompting the company to upgrade recently.
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).
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 the
Internet is fostering teen-agers' knowledge of the stock market and
possibly encouraging them to invest.
Ginger Thomson, founder and CEO of San
Francisco-based DoughNet.com, a money management Web site for
teen-agers, estimates 2 million teen-agers are investing 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), which details stock values.
Teen-age investors tend to learn a lot about
the companies before committing any money.
For Leung, whose portfolio includes Microsoft,
Intel, Computer Associates, Lucent, Coke and Cendant, that is
certainly the case. When his parents gave him the opportunity to
invest, "the catch was that I had to do my own research and tell
them why I wanted to get the stock," Leung explains. "At the time I
was interested in computers."
Leung tracks his stocks via the Internet, but
he rarely trades.
"Every time I sell stock, it goes up a lot," he
says. In seven years, he has only traded 20 times.
Patience is a virtue infrequently attributed to
kids. Only 12 percent of teen-agers spend all their money
immediately after receiving it, according to a 1999 study conducted
by Merrill Lynch. The study found 60 percent save about half, and 28
percent save most of their money.
Children tend to mimic their parents' saving
and spending habits, Bodnar says.
Leung takes after his parents. His mother is an
accountant, and he describes his dad as "an entrepreneur, manager
kind of guy" who runs a hotel and apartment buildings.
Leung says his parents recently gave his
younger sister the same opportunity to invest and that she mimicked
He smiles when he says, "She's probably going
to overtake me by the time she gets to my age."
David Leung's Tips
* Save as much money as possible.
* Look for growth companies in which your money
can increase at least 15 percent annually.
* Do not overpay for stocks.
* Buy when the stock price is low.
* Don't panic and sell at a loss unless there
is a change in the company's fundamentals, "if the company was good
when you bought it and the fundamentals are good," it's likely to go