YOUNG INVESTORS
 
 
        Many fund companies are beginning to realize the importance of educating the young for the future. With the advent of the computer and Internet ages, there are several companies and individuals who have formed Websites and investment clubs designed to teach children about financial responsibility. One of the best sites is the Young Investor Club (www.younginvestor.com). It allows kids to ask questions, make investments, and see how money grows when it is saved and invested. There are series of games and trivia questions that make the learning process entertaining and each child can choose a different guide to take them through the site. Although geared toward younger teenagers, the Young Investor site also has some areas devoted to adults. There is a college cost calculator and parents can email specific questions to the online experts.

        Another resource for children is the Stein Roe Young Investors Fund. It is managed by Erik Gustafson and David Brady and they want their young investors to see the power (and additional risk) of stock growth funds. The Stein Roe Young Investors Fund is a no-load mutual fund that invests in companies whose customer base consists largely of children and young people (e.g., McDonald's, Johnson & Johnson, Coca-Cola, Walt Disney, Microsoft Corp., and Broderbund Software, among others). They also publish a quarterly newsletter and each issue highlights a different theme and has games and a company profile. Parents also receive an issue, which serves as a guide on how to talk to kids about money and investing and there are helpful hints on raising a financially smart Young Investor.

To help motivate children to learn more about their investments, an educational kit is provided, which includes a wall poster, certificate of enrollment as a Young Investor, and material to help educate your child about basic economic and investment principles. The investments are designed to be easy for kids to follow and they try to establish a sense of ownership about the fund.

        Although the fund has been very successful in the past few years, its investment in growth stocks is contrary to the value investment theory that Mike follows.  We generally don’t recommend the volatile investment strategy that the fund has established, but if grandparents or other family members are interested in providing a small amount of funds to a child, you could suggest this fund. It does require a minimum initial investment of $500 (if an automatic investment plan is established) or a $1,000 minimum for custodial accounts with no monthly investments. Otherwise, the regular taxable accounts set the minimum deposit at $2,500. However, it is possible to get copies of the newsletters without opening an account, but you would not be part of the regular quarterly mailing list. You would just need to call Stein Roe at 800-774-4954 quarterly in order to get the updates.