Mutual Fund Teaches Kids That Investing Can Be Fun
Boston — THE task of whetting kids' interest in corporate America and the global economy has Boston-based Liberty Financial executives dreaming up games, quizzes, and wall charts in their corporate offices.
The mutual fund company is offering creative ways to communicate investment principles to children as part of its Young Investor Fund - a freshly minted mutual fund under the management of Stein Roe and Farnham.
The fund is targeted at families that need to start saving for soaring college fees, which, by some estimates, could approach $200,000 for four years of college in 10 years.
The mutual fund is the first of its kind to include an educational goal in the prospectus. Porter Morgan, a senior vice president at Liberty Financial, underlines the significance: ``If a child is not financially literate as they come into adulthood, they will have a hard time enjoying a full life.''
To spark the interest of youngsters, the fund will concentrate on buying stock in companies that children can identify with, such as McDonald's Corporation, the Coca-Cola Company, the Walt Disney Company, and Toys ``R'' Us - the blue chips of the '90s, as Mr. Morgan calls them.
Motorola and Microsoft Corporation are also on the list, along with Morton International, the famous table salt manufacturer, which also happens to be the country's leading maker of automobile airbags.
Morgan says the fund's quarterly newsletter will teach kids about the global economy by telling them stories related to companies in the portfolio. For instance, when McDonald's first ventured into India - where cows are considered sacred - it had to develop a vegetable burger to replace its beef variety, he says.
The newsletter will also encourage kids to make portfolio suggestions to which fund managers will respond in later issues. And it will include games like a portfolio scavenger hunt, in which kids try to find products and services in the house that are made by companies the fund invests in.
A toll-free number will ultimately be used to answer young investors' questions. ``We plan to have an interactive dialogue with shareholders - the children,'' Morgan says.
Established May 1 with $4 million of Liberty Financial money, the fund is expected to have mostly custodial accounts, set up by parents and grandparents. The Young Investor Fund represents the second phase of Liberty Financial's Young Investor Program, which began last year with a study of young investors and a 50-page guide to parents on teaching children about money.