Let’s listen to the children.
Listen carefully, and you’ll be reminded what a powerful influence parents, grandparents and other adults can be in their lives. And how, by leading by example, we grownups can shape their values and attitudes in life, including the way they feel about and handle money.
Let’s listen to a 13-year-old seventh grader from Coral Springs, Fla. Actually, let’s read something she wrote:
“My grandma has a famous philosophy. Let’s say you get a gift of $100,” she wrote. “Cut it in half and pretend you only got $50, and from the $50 only spend $25.
“At first, the plan didn’t thrill me. My gift of $100 is all of a sudden $25. Through the years, it’s making more and more sense.”
The grandmother explains:
“From the time my granddaughter was old enough to understand about money, I wanted her to know she can’t spend it all and still have it. I have nine grandchildren, and whatever I give them, I don’t want them to squander the money. I am happy that she heard me.”
She heard her grandmother well. And she expressed what she learned so eloquently that she was one of nine winners in a national essay contest for children on the importance of money and investing.
More than 1,200 children entered the contest, which was sponsored by the Stein Roe Young Investor mutual fund and open to fifth, sixth and seventh graders nationwide. Students in those grades make up the majority of the 135,000 shareholders of the fund, and most accounts have a parent or grandparent as a custodian.
The children in the contest were asked to answer this question, in 250 words or less: Who in your life has been most influential in helping you learn about money and investing, and what have you learned?”
The teenager wrote, “My first thought was my grandmother . . . She has taught me that investing is the key to financial success. I’ve always been the one to stuff money under the mattress.
“What I have learned from my grandmother is that money invested will grow into more money, while my money under the mattress will grow mold.”
Cynics may consider the essay contest just a gimmick–PR for the Young Investor Fund. And the fund itself has been called a gimmick–it supposedly invests in companies that affect the lives of young people, but that’s just about everything under the sun–from children’s favorites like Disney and Coca-Cola to telecom equipment makers Tellabs and Analog Devices.
So be it. The fund–open to grownups as well as to kids–has gained an average of 31 percent a year since it started in April 1994, ahead of the Standard & Poor’s 500 Index return of 28.5 percent. All it takes is $100 to open an account, with a commitment to add at least $50 a month.
And the best part is that the fund provides children–and their parents– with materials that explain financial concepts in a fun and informal way, including the quarterly newsletter Dollar Digest and an education-oriented annual report.
The Florida teenager, who was not a Stein Roe shareholder before, won $2,500 worth of Young Investor shares as the prize.
That amount was the second place prize in all grades. First prize of $5,000 worth of shares went to Annie Pecoraro of Naperville, Ill., among seventh graders. The 12-year old wrote a make-believe newspaper article as if she had been interviewed by a reporter about money and investing.
“My uncle encourages me by talking with me about setting attainable financial goals,” Annie wrote about herself. “My uncle tells me that getting an early start is a key to accumulating wealth.”
Matthew D. Holm of New Lenox, Ill., third-place winner among fifth graders, wrote: “My grandma Marie taught me a big lesson about money and investing, although I don’t think she intended to.
“Grandma Marie loves bingo . . . she plays once per week and spends about $25 per night . . . Grandma has been playing for 40 years.
“I began to wonder how much money Grandma would have if she had invested her $25 per week in a mutual fund instead. I assumed an average annual rate of return of 8 percent to 10 percent. The computer program calculated that an investment of $25 per week for 40 years would produce $347,686.21 at 8 percent per year or $598,361.23 at 10 percent!
“When I told Grandma how much she could have today had she invested the money, she said, `You can’t put a dollar amount on the enjoyment I’ve had over the past 40 years playing bingo.’ “
The judges said that it was hard to select from so many good entries. But, and this is no PR, all these kids are winners.
– Note: The last time I wrote about the Stein Roe Young Investor Fund, I drowned in letters asking for the telephone number. As long as you understand I am not recommending the fund, here it is: 800-403-5437. Look over the materials they send you and consider your goals and tolerance for risk before you invest in this or any other fund.
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Humberto Cruz will answer questions of general interest in his column. Write to him c/o Tribune Media Services, 435 N. Michigan Ave., Suite 1400, Chicago, Ill. 60611; e-mail: HCruz5040@aol.com.; read columns and stories by him at: http://www.sunsentinel.com/money/savingsgame/
