Head start - good financial habits should start in childhood

Black Enterprise, Oct, 1999 by Carolyn M. Brown

The May brothers are learning firsthand the power of investing and compounding from their father, Abraham. One portion of the elder May's portfolio--an IRA account he opened in August of last year--had a return of 25% in the first nine months. A city administrator, May has been investing in the stock market since 1984. The reason he opened accounts in his sons' names was because he wanted them to begin to understand the difference between income and wealth. "With income you work for your money and with wealth accumulation your money works for you," he explains. "I'm hoping that they will be in a position when their sons and daughters are ready to go to college that their tuition and expenses will be paid for."

Khari works part-time for the New York City Board of Education and is a student at Baruch College in New York, where he is studying business administration and computer science. He's looking to beef up his stock portfolio and to contribute more on a regular basis, realizing that he is investing for the long term.

to-do list

Start an investment club with other teens

Put aside a portion of your allowance or income for future savings and investments

Buy stocks in companies you know

asset allocation -- teens

13-year-old teenage boy * lives in West Bloomfield, MI * member of an 11-member investment club * club has about $500 among all the members * contributes a third of his biweekly allowance of $15 to the club's coffers.

This is a great age to start investing. An investor's time horizon significantly impacts investment results. The proper selection of a growth mutual fund with top holdings in either technology, pharmaceuticals or telecommunications would be a wise starting point. However, the one-time investment of $500 may narrow the selection, since many Mutual funds have a minimum investment of $1,000. I would encourage them to call Alger Funds for a free prospectus. All investors should read the prospectus carefully before deciding to invest.

SOURCE: MARK SPRADLEY, LEGG MASON WOOD WALKER

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