Sunday, March 22, 2020

Teaching Kids to Buy Stocks



Alright y'all, so this one was sent to me by the author himself. This one had my interest before he reached out because of the information inside! This one is definitely more educational than anything else. This is probably the finance class that a lot of us missed out on in a book. J.J. Wenrich has been teaching kids and professionals for over 20 years, and he decided that it was time to write a book. He wants us to learn how to probably buy stocks as adults, but writes it in a way that you can also teach your kids after you finish the book. He sent me this book last year, but I honestly don't think there is a better time to talk about this book.

With everything that is going on in the world right now due to the Coronavirus and the economic downturn we are all facing, why not learn about how to properly navigate the stock market? Since this is a book that walks you through everything that J.J. Wenrich has been telling people for years as well as his own kids, I am going to be giving a general idea of what is inside. That means this will probably be shorter than most of my other reviews, but it is not because I didn't like the book. I did and felt that I definitely learned something about finances that I know I never learned in school. With that being said, let me share the key points that I learned from this book.

This is NOT a "How to for Dummies" type book, because he understands that the stock market is not something that is talked about much anymore. He wants you to read this book, learn the right way to do things, and then pass that information along to your own children so that they can start investing in their own futures. We all know about 401ks, but J.J. Wenrich is going to teach you about regular stocks into business you see every day and on the news. Like I said, he has been teaching his ways to other adults and children for 20 years, so he definitely knows his stuff.

J.J. became interested in stocks when he was in the 7th grade when his very small town school teachers decided to teach his class about it. They even got a professional stock broker to come in and talk to the class before they started fake investing into companies. He lost interest in learning how stocks worked when he got into high school, but the class investing game was reintroduced his senior year which had him hooked again. He continued to do his own investigations in the stocks current going on his own time. He turned his passion for stocks into a business for his family with his wife by his side until she became pregnant with their third child together.

He eventually started teaching his kids about it during their homeschool lessons. He even made a deal with them that if they earned $500 each to make their cash cushions, he would give them $500 in stocks. He taught them how to pick them properly and had their own version of the stock game. When they were finally old enough to earn the money fully, he walked them through picking two stocks each. From there they all had fun as a family watching the stock market year after year.

Some tips and tricks that he recommends early on in the book to involve your kids is:

  • watch Shark Tank with your kids, it will help everyone learn how to truly analyze a business's potential
  • talk to your kids early on about the cost of things in a way that fits their life, like the cost of a toy or candy, that way they have a sense of a scale and can be value conscious as they get older
  • if you choose to, you can teach them the lesson of the daily grind by paying an allowance for some chores so that they get a good sense of hard work, balance, and pride in themselves
  • kids will also learn that they need to Take Care of Business (TCB) like their chores and school work so that they understand what will be expected of them when they start working an actual job
Now here are some topics that he explains and how it is in a language everyone can understand throughout the book:

  • "Compound interest is the most powerful force in the universe" -Albert Einstein
  • How compound interest works by giving charts of what happens to $1000 in a savings account at 1%, CDs @2%, 3%, and 4% for ten or fifteen years
  • Rule of 72
  • Inflation in regular life, like gas prices and groceries, and in stock markets
  • Golden Rule of Investing
  • Cash, Bonds, and Stocks are the basic types of saving
  • All types of investments have risk and reward
  • Cash cushion is needed before investing begins
  • Bonds are just loans from you to a business or government agency, how you can loose or gain money by having a bond
  • Breaks down all terms that you may not recognize throughout the book and in the glossary
  • Stock in a company is a piece of the company
  • Public Trading vs. Private Businesses
  • Gives all necessary formulas in a simple way so that you understand how each one is needed and when
  • Gives you what he calls the Rosetta Stone of Financial Ratios
  • Story, Numbers, and Expectations when looking into a business you may want to invest in
  • References Warren Buffet aka the Oracle of Omaha a bit
  • When investigating a company's stock history, be sure to look at where you think the business will be in 3, 5, or 10 years from now
  • DO the RESEARCH
  • Look at the company's balance sheet
  • Stocks are all about expectations
  • Stocks Follow Earnings, Dividends, PE Ratios, the Market
  • No way to time the market, what you buy is more important than when
  • S&P's 500 Index
  • Difference between Stock Trader and Stock Investor
  • Discipline is a must
  • There is no crying in stocks
  • Mutual Funds & ETF
I know that seems like a lot of information but it really is explained in terms that everyone should be able to understand. It all has a flow that doesn't have you turning back to certain sections as a review. He even shares some of his own and his family's success and failure stories over the years. The point of the book is to show you that getting into the stock market is a serious but not overly complicated thing. If you are interested in figuring out how to probably enter into the stock market or to teach your kids to be better prepared financially than you are, then you need this book in your life. I am super grateful for my copy, and I honestly think that this needs to be in a lot of personal libraries. To add it to your own head over to my page:

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