Learn How 2 Kids have more Invested than Millions of Americans

Follow these steps and you can do the same

A few years ago, I decided to open a brokerage account for my two kids. Today their accounts sit over $10,000 each and they haven’t even started high school yet.

I’m not trying to brag or boast but showing you what is possible and how I did this. There is no magic trick. No one gave my kids an inheritance. No one won the lottery. I didn’t go broke spoiling them. I’m not rich and I still work to put food on the table.

Over a decade ago, my son, who is the oldest of the two, was really into SpongeBob, the little talking sponge that lives under the sea. The TV show was on Nickelodeon. My son was around two or three at the time. My wife actually had to buy him a SpongeBob DVD because every time the show went off, he would cry.

Then I was thinking, who made SpongeBob? I knew the show was on TV and Nickelodeon didn’t have a ticker symbol. So I searched for who made Spongebob. I found out Viacom owned Nickelodeon which aired Spongebob.

My son had a little bit of birthday money so I figured I should invest in the stock. The stock was around $29 when I bought it and the stock rose to the low $80s. The stock price eventually crashed and I sold it below what I paid to avoid paying taxes. I also read news that Viacom was having trouble competing with other channels so figured it was a good time to sell.

When I first bought the stock it held in my personal stock brokerage account with USAA. I had USAA for a while and wasn’t sure about opening a brokerage account with other platforms since they were so new.

Open a custodial account

After some time, I didn’t want my son’s stocks mixed in with my stocks so I called the bank and asked them if they had a children’s stock account. They had custodial accounts where I would be the primary owner of the account but would make trades on behalf of my son. So I opened an account for him.

A few years later I opened a second account for my daughter. She also received birthday money which I deposited into the brokerage account.

Bought more stocks

My son continued to receive birthday money and I bought more shares of stock. He was still young at the time and I bought stocks he was familiar with. My son currently has 11 stocks. Last year, he actually asked for two stocks as his Christmas gift and they were the first stocks he ever picked, Tesla and Ford.

If you have followed Tesla, Elon Musk’s stock has taken off over the past couple of months. My son made a good pick since he asked for this at the right time and has seen a 400% return.

This is a snapshot of stocks in his account:

American Airlines (AAL)

Apple (AAPL)

British Petroleum (BP)

Ford (F)

Hilton Grand Vacation (HGV)

Hilton Worldwide (HLT)

Park Hotel & Resorts (PK)

ROKU (ROKU)

Tesla (TSLA)

Under Armour Inc (UA)

Wingstop (WING)

Custodial account number two

My daughter’s brokerage account has a few similar stocks but with a couple of differences.

Apple (AAPL)

Hilton Grand Vacation (HGV)

Hilton (HLT)

Mattel (MAT)

Microsoft (MSFT)

Park Hotel (PK)

Disney (DIS)

WINGSTOP (WING)

Most of the stocks my kids are familiar with. They have flown on airplanes, use Apple products, stayed at Hilton hotels, and eaten at Wingstop.

There were a few other stocks they owned but they were bought out by other companies. When this happened, the stocks were sold, and then there was cash sitting in their account. Some of the stocks they previously owned were Heinz which Warren Buffett bought and Virgin America which was sold to Alaska Airlines.

Purchased stocks at the right time

In both of these accounts, they have grown considerably compared to how much was invested in the accounts. None of these investments were speculative or penny stocks. These are all well-known companies and some you may have used in the past.

I knew my kids would have years before they would even need to touch these accounts so I consciously made the decision to buy good quality stocks. I didn’t want to risk seeing their investments crash after I bought them. Of course, there were instances when the stock would go down such as many did this year. Overall, the portfolios have performed well.

The only stocks that have not done well are Mattell and Under Armour. Both are doing poorly but I’m patient and waiting for a turn around from these companies so they can at least break even. I’m not including American Airlines, Hilton, and Park hotel stocks since the entire travel and hotel industry took a fall this year due to the virus.

Start your legacy sooner rather than later

No one taught me about stocks or investing when I was a kid. I didn’t make my first investment until I was 23 years old.

Now that I have kids, I want to leave them a legacy and give them something so that they can start their life on the right track.

As I mentioned in the beginning, there are many Americans who do not have a lot invested. People are living longer today and it’s scary to think how will they survive living off of social security? Social security is not a livable wage.

If you can, I encourage you to open a brokerage account for your kids. This will be a great gift you can leave for your children. Leaving your kids with something is better than nothing.

Have you thought about leaving your kids a gift to remember you?

Tom Handy is a top Writing, Finance, Investment, and Bitcoin writer on Medium, and the father of two kids. He retired from the Army and sits on several non-profit boards. You can find him on Twitter @tomhandy1.

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