Every parent wants to give their kid a head start, and the best way to do that is with investments. Teaching them money management when they’re young conditions them to be responsible with money as teenagers and adults. That's where the best stocks for kids come into play.
Investing is a habit. Kids should develop their investing muscles at a young age. The sooner they start, the more money they can accumulate before retirement. Benzinga explores several benefits of teaching your kids to invest and great stocks for them to buy.
Quick Look for the Best Stocks for Kids:
The Best Stocks for Kids
Getting kids to wrap their minds around investing and its long-term benefits can be tricky. Telling them that they will be owners in cool companies by buying shares will make investing more appealing to them.
Benzinga compiled a list of kid-friendly stocks that have proven to be great investments.
The Walt Disney Company
Kids love entertainment, and Walt Disney Co. (NYSE: DIS) provides it globally. The company offers media networks, parks and products. It produces movies and offers streaming services through Disney+, ESPN+ and Hulu.
The company operates parks and resorts such as the Walt Disney World Resort in Florida, Disneyland Paris and Hong Kong Disneyland. The entire family can experience the magic of Disney on the sea as the company offers Disney Cruises — a luxury ocean liner that incorporates entertainment found at its parks.
The Walt Disney Company also sells merchandise of all the favorite Disney characters such as Mickey Mouse, Cinderella and Buzz Lightyear. It publishes comics, books and magazines.
Besides being one of the biggest global companies, Amazon.com Inc. (NASDAQ: AMZN) makes online shopping convenient. You can buy almost any product on Amazon — computers, books, phones and t-shirts.
The company also provides entertainment — Amazon Kids+ features kid-friendly content. It lets them access apps, games, and music. Kids can stream TV programs and download movies. Amazon owns Audible, which kids use to listen to audio of their favorite books.
Besides a wide range of toys and electronics, Amazon offers fast delivery. Kids don’t have to wait long to receive their orders.
Apple Inc. (NASDAQ: AAPL) is the biggest company in the world by market capitalization — $2,694 trillion. The company designs and manufacturers smartphones, computers, tablets and wearables.
It’s responsible for producing some of the world’s most successful electronics such as the iPhone, Mac, iPad, iPod and AirPods. The company also produced the Apple Watch. Parents can set it through the iPhone, enabling kids to connect with family and friends through phone calls.
Apple’s App Store lets kids download all the major apps, and FaceTime enables them to see their contacts. The company also provides entertainment. Apple TV+ is a subscription streaming service that offers original films and television series. Its most popular kids programs are Doug Unplugs, Fraggle Rock and The Snoopy Show.
Video platforms have become popular, and Alphabet Inc. (NASDAQ: GOOGL) owns the biggest one in the world — YouTube. Alphabet was the fourth largest global company by market capitalization in 2021 and also owns Google, the world’s biggest search engine.
Google Play Family Library lets kids access family-friendly content such as games, apps, movies, books and TV shows. Kids Space lets kids enjoy content based on their interests, whether it’s animals or art projects.
YouTube Kids is a contained environment, ensuring parents that the videos kids watch are appropriate.
McDonald’s Corp. (NYSE: MCD) is the largest burger chain in the U.S. Kids love the Happy Meal, but they’re even more excited about playing in McDonald’s play spaces.
The reason most kids love the Happy Meal is that it contains a toy or a book. Some of the most popular toys McDonald’s offers are Mario, Fraggle Rock, Inspector Gadget and Teenie Beanie Boos. McDonald’s announced that the Sing 2 cast is starring on the Happy Meal.
The company also offers Creative Play — kids use sheets, coloring and puzzles such as Ugly Dolls challenges and Dancing Dot to Dot to entertain themselves.
Hasbro Inc. (NASDAQ: HAS) is a global entertainment and play company that offers toys, board games, television and gaming. Its independent studio, eOne, publishes programs such as Power Rangers, Transformers, Peppa Pig and My Little Pony.
Hasbro offers tabletop and digital games through Wizards of the Coast. Some of its most famous products are Dungeons & Dragons and Magic: The Gathering. Wizards of the Coast makes gaming possible on PC, mobile and consoles.
Besides apparel, Hasbro also offers toys and action figures such as Nerf, My Little Pony and Transformers.
Netflix Inc. (NASDAQ: NFLX) is the most popular subscription streaming service in the world. The company has more than 222 million subscribers and reported a $30 billion revenue in 2021.
The company offers various programs, animated films and cartoons. Some of the shows that kids love on Netflix are The Garfield Show, Lego, Last Kids on Earth and Avatar. Netflix enables kids to watch their favorite programs on TV, mobile devices and PC.
Netflix partnered with Walmart Inc. (NYSE: WMT) to create the Netflix Hub. It’s a digital storefront that offers dolls, playsets and merchandise inspired by shows such as Waffles and Mochi, Adat Twist and Scientist.
Nike Inc. (NYSE: NKE) is the biggest sneaker company in the world. One of the reasons for Nike’s dominance is its massive budget for endorsing the most popular athletes. Some of the athletes signed with Nike are Cristiano Ronaldo, LeBron James, Rafael Nadal and Michael Jordan.
Besides sneakers, Nike sells hoodies, t-shirts, caps and tracksuits. Nike’s kids apparel features popular shoes and gear. Nike KIDS Camps focus on developing foundational athletic skills for 5- to 8-year-old kids, practicing sport and athletic fundamentals like running, jumping, catching, throwing, kicking, dodging and balancing through fun drills and games.
Because Jordans are Nike’s most popular sneaker range, the company designed a Jordan kids’ collection.
Tesla Inc. (NASDAQ: TSLA) is the world’s biggest car company by market capitalization — just over $893 billion. The company’s mission is to provide the safest and most environmentally friendly cars. Tesla’s entertainment features lets kids access and video stream YouTube, Netflix, Twitch and Hulu.
Although Tesla focuses on manufacturing cars, it made a product specifically for kids — Cyberquad for Kids. For $1,900, the Cyberquad lets kids enjoy offroad fun on a four-wheel ATV with a full-steel frame, cushioned seat and LED light bars. A lithium-ion battery powers the ATV up to a 15-mile range and reaches a top speed of 10 miles per hour.
Source: Tesla Fans Schweiz on Unsplash
Can Kids Invest on Their Own?
Kids cannot invest by themselves. They need to be 18 years or older to open a brokerage account. Kids need a custodial account, which parents or guardians open on their behalf.
An alternative to a custodial account is for parents to invest a portion of their portfolio in kids stocks. Saving for kids by opening a separate account for them in the parent’s name is an option.
Parents can teach their kids portfolio management and monitor their rebalancing (adjusting a portfolio to restore allocations and risk levels). The parents’ guidance will train kids to manage their portfolios themselves at the legal age.
Benefits of Investing for Kids
Besides wealth building, teaching your children to invest benefits them several ways.
Learning good habits: Kids develop habits at a young age, and some stick with them for life. Teaching them responsible financial habits may spill over into other areas of their lives and help them understand responsibility and the consequences of poor decisions.
Understanding finances: Most schools don’t teach financial management; it’s the parents’ responsibility to do it. If children don’t receive financial education when they’re young, they may learn it when it’s too late. That puts them at a disadvantage over other children.
Saving for the future: By teaching your kids to save for the future, they’ll be financially independent sooner. The savings will help them fund unforeseen expenses, and they’ll be prepared for changes such as losing their jobs. Their savings will ensure they have a comfortable retirement.
Exploring potential career paths: Investments serve as a financial backup net. They allow kids to explore different career choices and not get stuck in a job they hate because of fearing a loss of income to pay bills. Your kids may find investing appealing, resulting in their pursuing a career as a trader or a financial advisor.
Compare the Best Custodial Accounts for Kids
Finding the best broker for your kids to invest with puts them on the right track. Benzinga compiled a list of the best brokers that’ll help your kids get a head start.
Frequently Asked Questions
Should kids learn to invest?
Yes. They benefit financially and investing teaches them responsibility.
Why should teens start investing?
Kids who invest at a young age get a head start and have an advantage over other children. They’ll benefit by reaching financial independence sooner, learning good habits, ensuring a comfortable retirement and having the option to pursue a career path they choose.
What are the best stocks for kids?
Benzinga offers a list of the best stocks for kids in the article above.