Your Questions About Stocks And Bonds For Kids

or copy the link

Michael asks…

I am interested in learning more about the stock markets and bonds and stuff like that.. any suggestions?

I am going to the library, is there any good books that i could check out like “learning the stock market” or “how to buy bonds“.. stuff like that i want to read a big book that will teach me a very usefull skill. I recently read an article on Yahoo! News about a kid who checked out a book at his local library and learned how to make Ipod Apps. Im very interested in learning a new specific skill by checking out a library book so if there are any books that are out there please list some. I am 18 and im going to college next year but i would still like to know how to invest in stocks or something else. I do not know much about the buisness world at all so if there are any other good books that teach you about skills please let me know, thanks for any time taken to read my question.

financi4 answers:

Investing for Dummies (I’m not kidding)
The link below (Again, I’m not kidding)
The Library

You can also set-up a “test portfolio” in Quicken (Personal finance software) to see how you would do. Also, Quicken is great for tracking your finances in general.

Ken asks…

Am I nuts for keeping my 401K in stocks?

I have a 401K at that I putting money into. I currently only have about 12K in there. I have become more aggressive lately and have been putting 6% if my income in there and the company matches up to 2%. So I am adding about 4K per year currently.

I am currently 34, divorced with 2 kids in their early teens.

I have my 401 in a managed fund that is about 80% stocks (domestic and foreign) and 20% bonds.

Even though the market is down, I still think I need to keep this setup until my late 30s when I will switch to about 60/40.

A few of my coworkers have switch everything this last weeks to 80% bonds.

My view is that I am buying the stock cheaper now at a cheaper price even though what I have in there is losing some money. (it went down in value 3% last quarter).

Should I stay the course and invest now in those funds or pull back go with more secure savings.

My kids will graduate college when I am about 43-45. Pretty young and no more kids so my expenses should theoretically drop after that unlike most folks my age. I figure that I can afford the risk now at 34.

I have no qualms working until I am 65-70+. I see too many folks tha quickly “fade away” after they retire and alot who stay mentally fit if they stay in the workplace even if in a lower income bracket job.
Thing that I am looking at is that if I have 12 K now and it drops to 10. That just means the 4 K I am putting in this year is buying the equivalent of what 5K would have bought with last years money so it isn’t as bad of a loss as it seems.

financi4 answers:

401K’s are the best thing since compound interest.
At your age stay in to the max you can invest only get more aggressive. Look at market history. You never lose over 10 years in the market, but inf;ation hurts you if you are in bonds!
Bonds are for us old folks, and I’m only 50% in bonds and retired.
I was able to retire early because I was aggressive young.

Steven asks…

Suppose you were rich, and your taxes were cut. Would your FIRST action be to hire people in your business?

Or would you pay off debt you owe?

Or would you cause your company to issue a dividend?

Or would you purchase capital equipment?

Or would you purchase inventory?

Or would you expand your business into new regions?

Or would you buy a trust fund for your kids?

Or would you invest in corporate bonds?

Or would you invest in stocks?

Or would you blow it on a new Mercedes?

Or would you sock it away for retirement?

Or would you analyze your business situation, and decide to hire new employees ONLY if you were fairly convinced that those employees would return more value to your business than the cost of their wages, and otherwise, do something, anything ELSE with the money?

financi4 answers:

I am rich, and unless demand was up for what I produce, I’d just pocket the money.

David asks…

Should I move out of bonds this year?

I keep reading that bond funds will fall this year and investors are moving back into stocks. I have purchased a couple of bond mutual funds over the last year and receive decent monthly yields that are reinvested, ~$50/month on an $8000 investment for one (TGMNX), which is earmarked for kids‘ college educations and I expect to hold for 7 – 8 years before it’s needed. The price has dropped, but that means higher yields, so I am unsure about the news that bonds are a bad investment right now… can you help me understand this?
To be clear, these are not individual bonds… they are bond mutual funds. So there is not one maturity date.

financi4 answers:

Corrected version according to the additional details:
If it’s a bond mutual fund then it could be a good idea to get out of it. Yields are very low on government bonds, which means there is no really room to grow. The last few years were good for bonds because the Fed dropped rates to stimulate this economy so bond value went up. In future years they are high chances of higher inflation which will hurt the bond market very much. The Fed could also raise it’s Rates which could cause rates on Bonds to raise. In other words, it does not seem like a good time to be in Bonds 🙂
Of course dont forget that no one has a crystal ball and then no one can tell the future. If the economy does not pick up, then bonds would still be interesting. You have to decide on which scenario is more likely to occur. The economy is giving “signs” that it’s growing again. But unemployement is still high.
If I were you, I would be too scared about inflaiton for the 7/8years to come. The governement spent so much money that inflation will make a come back. Investing in a mutual fund that is 80% blue chips /20% bonds seems to be a better idea or only stocks seems better. That’s a personnal opionion though and I cant read the future 🙂 I may be wrong.

PS; you have to look at the requirements to get out of te fund. Any fees? Consider thiswhen you make your decision. Can you get out right now free of charge? If yes then do it. Otherwise, how much would it cost?

If the price has dropped it means you lost money. Higher yields means price will drop and then you will loose money.

You should not be worried about price fluctuation if you plan on holding the bonds until maturity. Indeed, if you hold until maturity, you will get whatever the yield what supposed to be when you bought it. If the yield was 5%, then if you hold to maturity, you dont have to worry about return because you will get 5% whatever the bond market is doing (assuming that the company does not default).
Is 7-8 years the maturity of the bond (or around it)? If yes then dont worry.
If it is not and bonds are like 20years, it could be a good idea to get out because probabilities are high that interest rates will rise and thus bond value will decrease. (not good for you)

Robert asks…

getting married to a divorced father of a 8yr old need some legal advice?

getting married soon to a wonderful man but he has a money loving exwife with his child so i need some help.we live in new york can we make sure all his policies are up to date?does he need a will or if my name is on everything is that good enough?i have alot of money in stocks/bonds so do i need to do anything to protect that?can anyone tell me what other stuff we need to do when marrying a man with a crazy exwife(with a kid) who is out for every penny she can get?what do i need to do to protect myself and future children?

financi4 answers:

I married a man with the same situation. I went to a lawyer, paid $50.00, and got all the info. I needed.

Richard asks…

The dems and reps are in power have the control should they bear the responsiblity for their mismanagement?

For people who are making fun of those who claim everything is about oil. There’s also this little fact:

The Alaska state constitution claims common heritage rights of ownership of oil and other minerals for the people of the state as a whole. Citizen dividend checks are distributed every year in Alaska out of the interest payments to an oil royalties deposit account called the Alaska Permanent Fund (APF) created in 1976 after oil was discovered on the North Slope. The APF is a public trust fund – a diversified stock, bond and real estate portfolio – into which are deposited the oil royalties received from the corporations which extract the oil from the lands of Alaska. The first citizen dividend check from the interest of the APF was issued in 1982 and was for $1000 per every person for everyone in Alaska who had resided in the state for at least one year. Annual citizen dividends have been issued every year since then, for a total of more than $23,000 per person.

In 2003, each of the nearly 600,000 Alaska US citizens (residents of Alaska for at least one year) received a check for $1,107 from the APF. The total amount dispersed was $663.2 million. The $25 billion investment fund’s core experienced stock market losses which led to the dividend’s decline this past year compared to the several previous years. The amount was $433 less, a 28 percent drop from the 2002 pay out of $1,540, and a 44 percent decrease from the all-time high of $1,964 in year 2000. The amount changes based on a five-year average of APF investment income derived from the bonds, stock dividends, real estate and other investments.

Alaska relies on oil for about 80 percent of its revenue and has no sales or income tax. Alaska state government is mandated to invest 25% of its oil revenue into the APF while the other 75% of oil royalty revenue is dispersed to other government funds to finance education, infrastructure and social services. If 100% of Alaska’s oil royalties had been deposited into the APF, it is conceivable that the CD this year could have been about $4,400 or $17,600 for a family of four. But then there would have been no funds for roads, education and other public services and no funds available to run the state legislature – a libertarian dream fulfillment or a social and economic disaster, which one we will never know. If state services were to have been maintained while 100% of oil royalties were deposited in the APF, there would of course have been the need for income, sales and other taxes on wages and production.

Oil is just 1 of thousands of commodities, with all the thousands of commidities in your state why aren’t you getting paid?

With feds resources why can’t feds pay 50 times better than Alaska?

Kuwait pays this way $58,000 y no rent, utilities, phone, hospital bills
Dubia pays this way
Norway I’ve heard has a similar system
I hear Nigeria is working on doing this





financi4 answers:

We need a new party one that is not a farce like the current ones.a party that actually stands a chance and is not looked upon as a joke vote.unfortunately those with money have all the control so the regular people get screwed.bend over people another election is coming

Daniel asks…

Retirement advice for someone with a good 30+ years left?

Howdy, I am just looking for advice. I am a fresh college graduate with a degree in accounting. I am married and we do plan on having kids. During the next two years I know I/we will be making a substantial income, because I will be getting paid for two jobs, and my wife for hers. Afterwards I will be making roughly 70,000 a year. I plan on sticking with that job untill i reach the retirement requirement for that job. 17 years (i have previously worked for them). I am just seeking some good advice to ensure I will be able to provide for my family as well as be able to retire young. I know about the stock market, bonds, etc. But what I dont know much about (other than for tax purposes) is IRA’s, 401k’s, as well as proper diversification. I don’t want to risk a lot but I also want my money to be able to grow. It would be great if I could hear some ideas and maybe some good internet sites i can go to to help explain some of this too me. It would be much appreciated.

financi4 answers:


If I were young, I would be investing in small cap growth mutual funds or stocks. Go here for excellent low cost advice (

Don’t be alarmed at the low cost – it has some of the best financial advice on the Web.

You have lots of time before retirement which means the magic of compound interest will just keep building and building. It really works and if you keep investing every year, in 10 or 15 years you will be surprised at how it mounts up. In 30 years you could be a millionaire which probably won’t amount to much in 30 year owing the the ravages of inflation.

And that’s the primary reason to keep investing in small cap growth stocks – they will flog inflation to death.

When investing in mutual funds, select the no-load funds only. Do not invest in mutual funds with a “load”, an up front commission that you have to pay before when they sell you the mutual fund. Some charge as much as 10% which is a rrip-off. Many studies have shown that the no-load funds do as well as the load funds and sometimes a lot better.

Look at the AAI Shadow Stock Portfolio. I would try and emulate that portfolio if you want to invest in stocks. It was up 25% as of November 2006. The Vanguard Index fund is only up 14%.

AAII has some of the best financial advisers and the cost is very low. They have excellent guides and advice.

You may need a broker so go to e-Trade or Scottsdale who have low commission rates.

Do your own due diligence. Your own ideas are the best. Do not depend on someone else to select investments for you. Learn about investing so you don’t have to ask what stocks to invest in.

Be self reliant.

Remember what Emerson said: A foolish consistency is the hobgoblin of little minds, adored by little statesmen and philosophers and divines. With consistency a great soul has simply nothing to do.

Find stocks that have steadily rising net profits (earnings), low debt, and good P/Es, lots of cash, companies buying back their stock..

What interests you? Find stocks that pique your interest and passion.

You need fast growing good stocks with good earnings and in good sectors. You need to learn more about the stock market before you even think about investing in it.

The stocks world is divided into 12 sectors such as energy which chevron belongs to. It is next to last in the sectors list today.

Technology is numero uno, but things can change in a new york minute, but within the sector, the fastest growing are computer services, not Microsoft. Then, Electronic Instruments and controls. Next is computer storage devices.

The next hot sector is Healthcare, but heed the warning below. Go here for sectors: (

The best software is Vector Vest if you can afford it. It has sector investing.

Here is a free Web site for charting stocks: (

First of all, stay away from “professional brokers” and tips coming to you via e-mail or friends and acquaintances. And tips at Yahoo! Answers. And e-mail tips. Do your own due diligence – don’t rely on someone else. Read Emerson’s essay “Self Reliance.

Hey! They will say anything to get you to buy their junk. If it’s too good to be true, it is.

Remember this, they are just sales people trying to sell you what their firm is pushing. They are not security analysts or financial planners, not even financial advisers. Trust me, I know from experience that they cannot be trusted especially with a million dollars. You risk losing it all. A million dollar account is known as a “whale” and they would love to get their greedy little paws on it and suck it dry. They just want to make commissions on what they buy and sell for the suckers, err…clients..

Risk avoidance is the name of the game.

Remember, the harder I work, the luckier I get.

Penny stocks are highly speculative. I would avoid the ones under a dollar a share. For example, Best Buy started at less than $5. So there are some good companies, but it takes a lot of digging to find the good ones. You are looking for companies with good earnings, little debt, low capitalization, and good P/Es. For stocks under $5, very few will meet these requirements.

Stay away from the pharms unless they have patented drugs – do not invest in generic pharms, no growth there.

Check out which business sectors are the most popular and invest in the companies in those sectors. The number one, two and three are: technology, health care, and cyclicals (retail). These change periodically so keep current.

Go here for a list of growth stocks:

There are these lists all over the Web – you pays your money and takes your chances.

Watch CNBC, but don’t pay too much attention to the talking heads, except for Jim Cramer, the wild man – but he tries to teach you how to invest and has some great advice.

Get Jim Cramer’s Real Money: Sane Investing in an Insane World by James J. Cramer

Listen to Jim Cramer on

Go to Clearstation for quotes and tutorials on investing at ( Sign up is free. Look up a few stocks. Do their tutorials. Check out the sectors.

Get this book: Value Investing: From Graham to Buffett and Beyond (Wiley Finance) by Bruce C. N. Greenwald, Judd Kahn, Paul D. Sonkin, and Michael van Biema.

Another good book: The Motley Fool Investment Guide for Teens: 8 Steps to Having More Money Than Your Parents Ever Dreamed Of (Motley Fool) by David Gardner, Tom Gardner, and Selena Maranjian

Jim Cramer’s Mad Money: Watch TV, Get Rich by James J. Cramer and Cliff Mason

I Want to Make Money in the Stock Market: Learn to Begin Investing Without Losing Your Life Savings! By Chris M. Hart

Sensible Stock Investing: How to Pick, Value, and Manage Stocks by David P. Van Knapp

Stock Investing For Dummies (For Dummies (Business & Personal Finance)) by Paul Mladjenovic

All About Stock Market Strategies : The Easy Way To Get Started by David Brown and Kassandra Bentley

The Motley Fool Investment Guide and their Web site (

The Little Black Book of Microcap Investing: Beat the Market with NASDAQ/AMEX Microcap Stocks, OTCBB Penny Stocks, and Pink Sheet Stocks by Dan Holtzclaw

How To Make Money In Stocks: A Winning System in Good Times or Bad, 3rd Edition by William J. O’Neil

Trading for a Living: Psychology, Trading Tactics, Money Management by Alexander Elder

Big Trends in Trading: Strategies to Master Major Market Moves (A Marketplace Book) by Price Headley

Extraordinary Popular Delusions & the Madness of Crowds (Paperback)
by Charles Mackay (Author), Andrew Tobias (Foreword) This book talks about the Tulip craze in Holland where people would mortgage their homes to buy Tulip bulbs. Same thing happened in 2001 – 2002 with the Internet bubble that brought the stock market to its knees. The dot com companies were the Tulip bulbs.

Buy Investors Business Daily. It has lots of tutorials and I like it better than the stodgy Wall St Journal.

Money Game by Adam Smith

Common Stocks and Uncommon Profits and Other Writings (Wiley Investment Classics) (Hardcover)
by Philip A. Fisher. Recommended by Warren Buffet who took $100,000 and grew it to $34 billion!

Value Investing with the Masters by Kirk Kazanjian

Valuegrowth Investing by Glen Arnold

The 5 Keys to Value Investing by J. Dennis Jean-Jacques

The Intelligent Investor Rev Ed. (Collins Business Essentials) by Benjamin Graham. Warren Buffet was his student at Columbia.

The Money Masters by John Train

The Bogleheads’ Guide to Investing by Taylor Larimore

Common Sense on Mutual Funds: New Imperatives for the Intelligent Investor by John C. Bogle

Why Smart People Make Big Money Mistakes And How To Correct Them: Lessons From The New Science Of Behavioral Economics by Gary Belsky

Rule #1: The Simple Strategy for Successful Investing in Only 15 Minutes a Week! By Phil Town . See his Web site at ( Free sign-up. I got the book at the library.

Listen. You don’t have to spend a lot of money on these books – most can be found at your library and those that your library doesn’t have they can usually get from other libraries in your state.

Most of these books talk about stock and mutual fund investing, but for a good introduction to other forms of investing Gerald Appel has a great book called Opportunity Investing – How to Profit When Stock Advance, Stocks decline, Inflation Run Rampant, Prices fall, Oil Prices Hit the Roof and Every Time In Between.

First, Break All the Rules: What the World’s Greatest Managers Do Differently by Marcus Buckingham and Curt Coffman Not a book on investing, but it’s a nice segue into the next book.

Now, Discover Your Strengths by Marcus Buckingham and Donald O. Clifton

Go Put Your Strengths to Work: 6 Powerful Steps to Achieve Outstanding Performance by Marcus Buckingham

Finding your strengths is important when investing. These books teach you to build on your strengths, what you a good at. Everyone is good or passionate about something. Why not get better at what you are good at?

Another good book is: Opportunity Investing: How To Profit When Stocks Advance, Stocks Decline, Inflation Runs Rampant, Prices Fall, Oil Prices Hit the Roof, … And Every Time in Between (Hardcover)
by Gerald Appel

Most mutual funds do not even keep up the the return on the S&P. That’s like 99% of them.

Vanguard Index funds are a no brainer.

A CD is better than a savings account. They range from six months to several years. You cannot touch your money tho until the time limit is up.

Check out this Web site on Direct Investment Plans where you can buy shares directly from companies: ( Usually no fees and you can buy one share at a time.

Bonds are probably the safest. But they are not for the young. You might try a bond fund. They might return 5 or 6 percent. At 5% a million would return $50,000 a year – not a bad income. Remember, you have to pay taxes on the $50,000.

There are also municipal bonds and the income from them is taxfree especially if you buy them in a state that offers them, but they only pay about 3%, but it’s mostly taxfree.

Look into Fidelity sector funds. Buy the top three, then in six months look how they are doing and if not so hot, select the next three that are best. Do this for a few years and you will make lots of money.

Kindest Personal Regards,

Walt Brown
Site Build It Certified Webmaster

P.S. This is a life-long learning process. Reading these books and applying the rules to analyzing stocks that may be good It takes time. Be patient and keep reading and listening. Don’t be a sucker and follow someone elses advice. Be your own man or woman. Depend on no one except yourself. You can only get smarter and stronger that way.

P.P.S. Internet has lots of good stuff, for example ( is very good and their discussion of MACD is one of the best, barring its originator, Gerald Apple, but now we are getting into Technical Analysis and that is not for beginners. But it is an important factor in finding good stocks that are going up and growing. Remember, tiny acorns grow into mighty oaks.

Charles asks…

Buy a house now, or wait – unusual circumstances!?

I have $40,000 down, can afford $3000 per month and have good credit. The thing is, I won’t be living in the USA until 2017! Should I buy now and rent the house out, or wait? By 2017, I won’t need a loan to buy a house (I’ll have saved $800K), and I will be retiring – to live in New England (NH or Vermont). Should I pay 2007 prices with a loan at 6% (or 2008 by the time I locate what I want) or pay cash in 2017, at those prices, whatever they may be? Another option is wait 2 years for prices to bottom, then buy and rent it out. If I buy in 2009-10, I may be able to swing 50% down. The longer I hold it, however, the longer I have to pay property taxes and all other fees/expenses. My details: 41yo, married, zero kids (CF) ~$100K tax-free pay, total monthly expenses <$1000, $145K equity in foreign condo (we own it – paid off), other investments (Stocks/bonds, etc) = ~$80K. Zero debt; zero expensive habits. I really want to retire/move home to the USA in 10 years. Thanks in advance!

financi4 answers:

Buy now, forget what the media says, real estate rarley goes down, and when it does its usually confined to really small areas for a short period of time. Real estate in the USA doubles about every 12 years, that means if you want a $400k house now it will be about $700-$750 by the time you retire and take all your savings.

With your down payment you should be able to buy the property do a 15 yr mortgage and the rent will cover all your expenses, in 10 yrs you would only owe about $150k then use your $800k or so to pay that off, and enjoy life.

William asks…

Where should we invest or save our personal income?

My husband and I are frugal, and we love to save as much as we can. I max out my 401k yearly, but my husband’s employer doesnt offer any retirement benefits so we max out our IRA’s. We started to save $10K a year and put it in an emergency fund. However, we still have $3K a month to save. Where should we invest it? Our net worth is less than $500K, and we make gross $150K/year combined and no kids yet. A financial advisor suggested putting the extra $3K a month in a variable annuity or stocks, but didnt suggest CD/Treasury Bonds, etc. What’s the best financial wealth strategy for a couple in their mid 30’s?

financi4 answers:

You should invest in stocks, bonds, and money market funds. You want to buy a diversified portfolio of stocks, as individual stocks are too risky. For most folks this means buying mutual funds. I like, other people like Fidelity, TIAA-CREF, and DFA. Buy no-load, low cost funds. If you are like most people you will invest part of your money aggressively in stock funds, and part conservatively in money market funds and bond funds. has an on-line questionnaire which will give you an idea how aggressive you want to be.

I like index funds. Because of their broad diversification, you are less likely to have a dramatic drop in value. They also have the lowest expenses. For stock funds, I would suggest putting ~70-80% of your money in the Vanguard Total Stock Market Index Fund. And ~20-30% in a foreign stock index fund. However, there are many different opinions out there on what the best mutual funds are. Read the links below and form your own opinion

Buying a house instead of renting will save you a lot of money in the long run. You don’t have to pay rent and you build equity in your house instead. Buying rental property can also be a good investment. However, being a landlord can be hard work, and many people are not good at it. If you don’t know how to handle deadbeat renters, you can have trouble.

If you have high-interest debt, like credit cards, it is best to pay this off first before trying most of the investment ideas above. You should also have 3-6 months of salary saved up as an emergency fund in a bank or money market fund before trying more risky investments.

I do not recommend annuities. They have high fees, many hidden.

Believing advice you get on Yahoo answers can be risky, so read these websites for further information. If you find it too confusing, contact a professional financial advisor. They will charge you significant commissions, however.


Annuity articles:

Powered by Yahoo! Answers