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Piggy bank stocks

graphic
 

Budding tycoons follow market

July 5, 2000
Web posted at: 8:26 p.m. EST (0026 GMT)

In this story:

Stock market primer
Learning, investing early

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More is better, especially when you're talking money. But most teens today know they aren't going to get rich by putting away a few cents a day. So in greater numbers, young people are taking their piggy banks to the market -- the stock market.

"Nothing is guaranteed in life," says Helen Adeosun, 14. "And with saving there is somewhat of a guarantee that you'll have something for tomorrow or the next day or eight years from now."

 

Adeosun is just one of a growing group of budding tycoons who are scooping up stocks, making money and financing their futures. Adeosun uses the Internet to find information about business mergers and acquisitions that might drive her stock prices up or down.

Buying the right stocks early could turn tens of dollars into hundreds of dollars. Like any form of investment, the stock market involves risks and losses. But over time, say financial experts, the stock market produces the best return.

“In 40 years, I’ll have over $50,000 just from putting 50 cents aside every day,” said Clark Howard, a popular Atlanta consumer advocate and radio talk-show host.

Stock market primer

Just what is a stock? And how do people use it to make money?

If a company isn’t private -- not owned by a person, family or group -- then it’s public. Such companies sell parts of their ownership as stocks or shares.

“A stock price is a reflection of a company’s underlying earnings power. The greater the earnings power, the greater the stock price,” said David Brady, senior portfolio manager for Stein Roe Young Investor Fund, an Illinois firm dealing specifically with teen and younger investors. “When you see stock prices go up, that means that company is making more money. And if they are making more money, they are making more product and hiring more people.”

Those people, in turn, spend more money and invest more. So if the market is rising, Brady said, that’s generally a healthy indicator that the economy is doing well.

Investors track how well the stock market is doing by referring to the Dow Jones industrial average, an average value of stock from a certain number of major companies. If the average is higher than it was the day before, the market has gone up. If it’s lower, the market has dropped.

Learning, investing early

Each year there are more young investors keeping their eyes on the Dow. When Stein Roe started in 1994, it had 4,056 investors. By the end of 1999, its client roster increased to more than 200,000.

"We tend to get e-mails and letters and phone calls on a constant basis,” said Eric Gustafson, portfolio manager with Stein Roe. “Some of our young investors have done a great job recommending stocks to us.”

Schools recognize that more young people are purchasing stocks. Teachers are providing information about the stock market and encouraging students to build stock portfolios. Pupils in grade school are learning terms such as broker’s commission and shares.

And that’s a good thing -- smart investors start turning pennies into profits early, Howard said, or “you will work till you die.”


CNNfyi's Christy Oglesby contributed to this report.



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