Monday, July 20, 1998
Foolish Education, Part II
By Chris Walsh
Last month I wrote my first fribble. No big deal, but the loose change debate tickled my fancy.
In that fribble I said that I would someday use the money my kids, Jon and James, are budgeting towards college to teach them a little about the stock market. Well, I've been thinking about when it makes sense to start that lesson for about a month now. Finally, I figured what the hey? This isn't really rocket science, and these kids are smart.
So, I set up a little plan. I investigated Coke and McDonald's, figured I liked either enough to invest some of my own money, and set out to get my kids to invest. (By investing some of my own money, too, I could quietly pay the broker's fees, and save that lesson for a little later. We'd also share one fee, and save a few bucks.)
The conversation started innocently enough: "Hey, kids. What's your favorite restaurant?" I really expected that I'd hear about McDonald's, and that we'd end up with a few shares of MCD.
But to my surprise, each kid said they liked different local Italian restaurants because of the pizza. Worse, while one is public, I had not done any homework on it. Definitely unFoolish, and the wrong lesson to teach if we bought without looking into the company.
Thank goodness I had a "Plan B!" I asked each kid what they liked to drink with their pizzas. "Sprite," said James. "Surge," said Jon.
My eyes lit up. I must have telegraphed my interest because both kids got that look that means they know I have an idea they need to investigate thoroughly. "Hey, James, Dad is getting enthusiastic again. Last time that happened we ended up watering the flower gardens as an extra chore."
But I plowed on anyway. "Both of those products are from Coca-Cola! How would you like to make some money each time you drink a Sprite or Surge?"
Well, they might be wary, but these kids aren't dumb. "How????" they asked quickly.
"Well, you could buy a little piece of the company that makes Sprite and Surge. Then when you buy their product, you make money for your company. That makes the company more valuable, and so the piece you own is worth more money."
Jon, the oldest, returned to that wary look. "How much will that cost?"
"Well, let's hop on the Internet and find out!" A quick check on the Motley Fool showed me KO closed last night at $85 1/4. (I had to explain why it was $85 1/4, instead of $85.25, to Jon. Finally, I just had to say because that's the way it is.)
After that, both kids went for it! So, last night I spent an enjoyable hour counting change with my kids and adding that total to passbook savings accounts. And this morning, the three Walsh boys joined the ranks of KO investors.
I'm looking forward to explaining that they made $1.50 per share today without doing chores. I think I'll pick up a six pack of Coke on the way home to celebrate!