Tuesday, April 07, 1998

Out of the Mouths of Foolish Babes
By Kristin Hernberg ([email protected])

Your teen spent how much on those shoes? She pierced her what?

While many parents wish their teens had some sense, I must admit that I am the mother of a 16-year-old Fool. Peter saves his money, invests it well, and has watched it grow steadily. Here are some of the factors that have contributed to his Folly:

1. Hard Work. We never gave him an allowance, and he believes this was essential in developing the habits of hard work, consistent saving, and infrequent spending.

2. Intriguing Information. Peter had an early interest in numbers and stock quotes. A neighbor regularly gave Peter her issues of The Wall Street Journal, which he enjoyed as early as the fifth grade.

3. Fun Gifts. For his twelfth birthday, his grandmother (my Foolish mother) gave him several shares of McDonald's stock, one of his favorite gifts ever.

4. Mutual Funds. He invested his paperboy earnings in a mutual fund, following his Foolish Dad's direction in choosing the Vanguard S&P 500 in 1994 (cha-ching!).

5. Stocks. More stocks, purchased through E*Trade, joined our son's portfolio two years ago, after a year of running a mock portfolio on Quicken. Options, which looked like such fun, were tried and abandoned.

6. Ahhh, Compounding. "Gee, Mom, did you know that if I put away $500 now [at age 12], I'll have over $150,000 for retirement without ever adding any other money?"

7. Adult Involvement. Dad, with his MBA in finance and accounting, has been a wonderful resource. I, formerly a ditzy spender, have been Peter's study partner. Now, at the age of 39, I am beginning to catch on to what my Fool has known since he was 11.

8. Consequences. He's made some superb decisions, and some real losers, too. We talk over his purchases before he buys -- whether a new computer or a tech stock -- but we allow him to experience the consequences of his choices. When his Pentium loses value, we commiserate, and when Intel goes up, we congratulate.

We have four kids ages 11 to 16, so I realize this isn't an easy job, but the time and effort we invest can pay big dividends compounded over time. Even the child who is today's "Dog of the Does," invested in wisely, may well outperform expectations of even the most optimistic analyst!

Persevere parents. Who knows? You may yet raise a Fool!

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