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3 Stocks to Get Your Kids Excited About Investing

By Travis Hoium - May 15, 2021 at 11:00AM

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And they could be big winners, too.

Success in investing often has more to do with the time you have in the market than the returns you generate each year. So the earlier you get started investing the better.

As someone who bought his first stock when he was 13 years old, I know that a key to building lifelong investing habits from a young age is getting the child's attention, and another is finding a company -- and stock -- they can understand.

If you're getting your kids started investing like I am, three great growth stock ideas to get started with are Disney (DIS -2.55%), Virgin Galactic (SPCE -5.04%), and Snap (SNAP -7.21%)

Two kids dressed like businessmen and counting money.

Image source: Getty Images.

The company every kid knows

Disney has so many identifiable, kid-friendly touchpoints that it's a great starter stock for children. My son, who is 4 years old, uses the Disney+ app daily to watch shows like Mickey Mouse Clubhouse or Pixar movies, but maybe your child likes Marvel or Star Wars movies or has gone to a theme park. It's fairly simple to get kids excited about Disney, and that can lead to discussions about how we can own a piece of the company that makes the shows and movies they interact with. In my home, we've even talked about how the Disney+ app costs money, but some of that money is ours because we own Disney stock. And this can be extended to movies in theaters, action figures, theme park trips, and everything Disney does. 

I also like that Disney's business is easy to understand for even the youngest investors. For example, the popularity of Disney+ means growth in streaming revenue and the ability to make more shows like  The Falcon and the Winter Soldier, The Mandalorian, and more, which then attract more subscribers. At theme parks, when the company adds a new attraction or entire park, it means more people can visit every year, which means Disney makes more money. 

Disney can also be an early introduction to dividends. The company pays a modest dividend that yields about 1% today, but the idea that you can be paid just for owning a stock may be a brand-new concept to your child, so the company can help teach the value of dividend stocks long-term. Disney is still recovering from the impact of the pandemic, but with parks opening and streaming growing, there's a lot to like about Disney as an investment, making it a great foundation for any early investor. 

Rockets are the hook

What's more exciting than talking to your kids about rockets? Few investing topics can hold a child's attention like sending rockets and passengers into space, and Virgin Galactic is one of the few companies we can invest in to directly get access to the sector. 

The company has gone through its share of ups and downs getting its commercial space flight business off the ground, but it's scheduled to fly into space within the next few months, and paying customers could be taking short space flights later this summer. What's cooler than investing in a company that's bringing real people like you and me into space? 

As a company that makes very little revenue so far, this isn't a value stock -- a stock that's on sale compared to more established companies -- by any means. But it could be a great growth stock for decades if the company is able to reach space with commercial customers. And when you're watching early space flight clips it can be an opportunity to talk to kids about how they could own a small piece of the company making space tourism possible. 

Meeting kids where they are

Sometimes kids have a lot to teach us about investing, and Snap is one of those companies that kids are much more likely to fully understand than adults. Snap's users are generally younger -- 90% of 13-24-year-olds in mature markets use Snap --  and they're using the Snapchat app to communicate in ways that seem foreign to some of us. That can make the stock extremely relatable to kids. 

What investors see with Snap is a company that's growing extremely quickly, with revenue up 596% in the past five years. This is driven by user growth, with the number of daily active users (DAUs) going from 174 million in Q2 2017 to 280 million in the first quarter of this year. The other driver is revenue per user, which is up from $6.29 in 2018 to $10.09 in 2020. And as advertisers add more to their budgets for Snapchat, this number should continue to grow.

What can be an attention grabber for kids and a potential growth driver for Snap is augmented reality. Snap got into AR with face filters, and that may seem like a low-utility technology, but it was the foundation to build a suite of tools for developers and advertisers to build content for the Snapchat app. And as AR improves, we'll see new offerings like AR interactions that multiple people can see live on their phones from different views. AR glasses are also likely on the horizon, which could be a fashionable wearable that kids will want to buy for themselves.

Young people are really showing the way with Snap, and it may be time to pay attention to where kids are spending their time and meet them where they are. 

It's never too early to start investing

Starting kids investing early can set them on a lifelong path to wealth creation, so this is an important topic for parents to get started on early. And getting kids excited about owning a piece of a company they use regularly or are excited about following is a great way to get them engaged with investing. 

What I've learned investing with my kids is that I may have just as much to learn as my kids do and they can unearth some amazing investment opportunities. And hopefully the lessons we share will help us all on a path to be smarter, happier, and richer

Travis Hoium owns shares of Snap Inc., Virgin Galactic Holdings Inc, and Walt Disney. The Motley Fool owns shares of and recommends Virgin Galactic Holdings Inc and Walt Disney. The Motley Fool has a disclosure policy.

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Stocks Mentioned

The Walt Disney Company Stock Quote
The Walt Disney Company
DIS
$119.54 (-2.55%) $-3.13
Snap Inc. Stock Quote
Snap Inc.
SNAP
$11.65 (-7.21%) $0.91
Virgin Galactic Holdings, Inc. Stock Quote
Virgin Galactic Holdings, Inc.
SPCE
$6.30 (-5.04%) $0.34

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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