Learning about investing at a young age can be one of the most powerful ways to build a solid foundation for your kids' financial future. Knowledge and experience compound over time, and so do investment returns. The sooner your children start learning about money, saving, and investing, the better their chances of being financially successful throughout their lives.
These companies are strong enough to be considered core holdings of any solid long-term portfolio, and they are also great candidates to start teaching your children about the basic principles of successful long-term investing.
Disney (NYSE:DIS) is a no-brainer when it comes to getting your children interested in the stock market. Mickey Mouse, Tinker Bell, Snow White, Winnie the Pooh, Pocahontas, Nemo, Hulk, Spider-Man, and Darth Vader are just some of the most famous and recognizable names that differentiate the company from the competition, and they are tremendously popular among children of various ages.
These may not be flesh-and-bone people, but investors can rest assured that they have a very real economic value. The company monetizes its characters and franchises across multiple platforms: movies, theme parks, shows, merchandising, etc. This provides a lot of leverage when it comes to making money from its properties, and it's an unparalleled advantage in the media and entertainment industry.
As if that weren't enough, ESPN is a big cash generator for the company, the media networks segment brings in almost 70% of operating earnings based ont the last 3 quarters, and it has been estimated that ESPN could represent more than 40% of Disney´s overall operating income. /
It would be enormously difficult for competing networks to replicate the expensive long-term contracts ESPN has signed with major sports leagues and associations around the planet, so this cash cow is another distinctive strategic asset for Disney.
Disney is an intergenerational company that has built strong emotional links with children and their parents around the world thanks to its unique brands and intellectual properties. Maybe it's time for your children to learn how the company turns those assets into profits, and owning a little piece of that Magic Kingdom by becoming long-term shareholders in the company will most likely resonate well among investors of all ages.
LeBron James, Serena Williams, and Cristiano Ronaldo have many things in common; they are among the most popular and renowned athletes in the world, and they are also sponsored by Nike (NYSE:NKE).
Nike refers to marketing expenses as "demand creation expense" in its financial statements, which is quite an appropriate term in this case. The company is the undisputed market leader in the global sports apparel and shoes industry, a position it has built through years of investing in memorable marketing campaigns, product innovation, and a focus on quality. This provides a huge advantage in terms of credibility when it comes to launching new products or entering new markets.
Thanks to this differentiation Nike enjoys an operating margin in the area of 13.8% of sales, materially above the industry average near 11% according to data from Morningstar. Both revenue and future orders increased by 8% versus the prior year during the last quarter, so Nike is still running at a nice speed in spite of its huge market presence and premium prices.
Sports are not only fun, they are also good for your children's health, and people around the world are becoming increasingly more conscious of the importance of healthy living habits. It would be quite easy for your kids to relate to the company that sponsors many of their favorite athletes and provides the clothes and shoes for their own sports activities.
Unlike previous generations, your kids likely will not use an encyclopedia; that's what Google (NASDAQ:GOOGL) is for. Young children have many years of formal education and informal learning ahead of them, and Google will most likely play a big role in that process throughout their lives. It's not only Search; apps and services like Android, YouTube, Maps, and many others are deeply entrenched in the everyday lives of big masses of the population on a global scale.
Google's mission is "to organize the world's information and make it universally accessible and useful," quite a valuable service for everyone, especially for the young and curious. The company also feeds itself from the data and information it gathers from its users; Google gains more users as its services gets better, and it gets better as it obtains more information from users.
According to Interbrand, Google is the second most valuable brand in the world. The company has an undisputed leadership position in online advertising and self-sustaining competitive strengths thanks to a positive cycle of improving product quality as the company grows over time.
Like other industry players, the online advertising king is being affected by falling add prices lately: average costs per click decreased by 6% year-over-year in the last quarter. But Google still delivered a 23% increase in volume which more than compensated the decline in prices, and overall revenue grew by 19% during the quarter. Google is an industry leader in the promising business of online advertising, and there is no slowdown at sight for this giant.
As if that weren't enough, Google is one of the most innovative companies around, building products like self-driving cars and augmented-reality glasses with tremendous potential for disruption in the long term. Chances are, your kids will have a deep relationship with Google throughout their lives, so getting to know the company's investment merits at an early age sounds like a smart idea.
An education to last a lifetime
A lifetime of investing rewardsA solid financial education is one of the most valuable gifts you can give to your children. Companies like Disney, Nike, and Google are particularly good candidates for your kids to learn about the importance of sustainable competitive advantages as long-term drivers of success by analyzing businesses which they can understand and relate to.