Last summer, if Steve McGavran's sons were in the car, he could buy gasoline from only Exxon.The gas station wasn't giving anything away. The McGavran boys -- Max, 6, and Jack, 8, of Lenexa, Kan., a suburb of Kansas City -- were playing a stock market game and had included Exxon Mobile Corp. in their pretend portfolio.It was a wise choice -- and a good way for the boys to learn about the stock market, which they have more than an academic interest in.The game is one of the services offered by their mutual fund, the Monetta Young Investors Fund.It was started by Bob Bacarella, of Illinois, who has four grandchildren and was concerned about their financial literacy."I've been against a kid's theme fund (which focus on toy companies and child-friendly restaurants) for years," he said.Instead, he came up with an idea to have a fund in which half would be tied to the Standard and Poor's 500 Index, 40 percent would be put into solid companies that were recognizable to children -- such as Disney, McDonald's and Nike -- with 10 percent left for Bacarella to trade as the fund manager.A portion of the fees from the Monetta Young Investors Fund goes toward educational materials that he sends to the children who invest.This year, the investors are learning the financial meaning of the phrase "taking a bath," as the fund is down more than 20 percent this year.But even in a down market, there are lessons to be learned."I tell (my daughters) now is the time's to buy," Dennis Dietrich, of Hamburg, Pa. Dietrich, 54, is an electrical engineer with two daughters, Eve, 17, and Dawn, 14."I explain to them what they're doing is dollar cost averaging," he said. Dollar cost averaging is an investing technique intended to reduce exposure to risk associated with making a single large purchase by spending a fixed dollar amount at regular intervals on a portfolio, regardless of the share price.Dietrich said dollar cost averaging is how he has looked at his own portfolio since he was 22 and opened his first fund. Now his 17-year-old, who spent the summer working on a farm counting bugs as part of a research project, has her own checkbook to invest her own money in the fund.Eve Dietrich said she remembered talking to her father about dollar cost averaging, but didn't fully remember what it was."Up until the point I got my job, my finances were handled primarily by my parents," she said.Eve and Dennis Dietrich have sat down at the computer and run through stocks, but she said she doesn't follow them.Maybe someday Sophia Sinicrope of Kennedy, Pa. will pay attention to her funds, too, but she has a lot of other things to learn first. She's not exactly that baby from the commercial who sits at the computer and buys stock, but, at 16 months, she still has investments.Her parents contribute to the young investors account her grandmother started for her.Sophia's mother, Alyssa Sinicrope, 29, said they were saving the money for Sophia's college fund so perhaps, unlike her parents, she won't still be paying for college years after she graduates.When Sophia is old enough, her parents might take her through the various calculators on the site, like McGavran has done with his boys.McGavran has shown his sons what they will need for their own retirements -- a real lesson in planning ahead. There also are sections of games and a calculator on how much to give a child for an allowance.The McGavran boys must have been paying attention -- they won the stock market challenge and a $100 gift certificate.Bacarella said he also sends his top players hats and Nintendo Wii game systems.When his own children were young, Bacarella said he bought them each shares of Binney & Smith, which sent his children Crayola Crayons, Silly Putty, coloring books and a Slinky as part of their stock purchase. The company is now Crayola LLC.Now, when accounts are opened for children, the Young Investors Fund sends them a packet of age-appropriate items including piggy banks for the youngest of investors, crayons and a money-themed coloring book for 3- to 7-year-olds, a wallet for 8- to 12-year-olds and a 24-chapter investment tutorial and budget register for children over 13 (proving it is best to get in early). The teenagers also get a baseball cap with the Young Investors Fund logo."Every parent talks about financial literacy," Bacarella said. The idea behind his fund, he said, "is about getting kids involved in the process in a fun way."E-mail Ann Belser at abelser(at)post-gazette.com.(Distributed by Scripps Howard News Service, http://www.scrippsnews.com)
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