BI > OCTOBER 1997

Teen Teaching Gets a Big Boost with 'Investing For Life'

It was Tom O'Hara's and Ken Janke's shared vision to develop educational programs for younger investors. So, in early 1996, NAIC set up a department to explore various alternatives for offering investment educational products to young investors. In April, 1996, I joined the NAIC Investment Education Institute (IEI) to help lead the crusade to distribute the NAIC message to our nation's younger population.

My first mission: develop a self-study (home-study) investment and personal finance course for teenagers. Fourteen months later, after several "mid-course" corrections, we have lift-off! Investing For Life has been launched, and is the first of what we anticipate will be many new programs designed with the younger investor in mind.

The need is very real and very timely. The youngest generations will most likely experience a totally different Social Security system by the time they reach retirement. A significant number of large corporations (potential employers) are reducing or eliminating their pension plans, shifting to 401(k) plans where employees assume the risks for their own investment decisions. We also know that many school systems in the United States offer basic economic and financial education courses, usually only through elective courses. Too many people are getting into their 30s and 40s before they start to understand basic investment principles.

The gap between a first time investor at 30 years of age and one at 15 is 15 years. I don't need to tell any seasoned NAIC member the significance of this time frame. It is dramatic in terms of compounding total return concepts!

With these needs in mind, the IEI began to develop a "self-study" investment and personal finance course, specifically written for early high school age students (15-16). The course was designed to touch on major investment and personal finance concepts, without being too detailed and too complex. The course also was designed to introduce a young investor to the NAIC principles and offer an example of selecting common stocks by using the Stock Selection Guide.

This latter section of the course was initially researched and written by Betty Taylor, a long-time contributor to NAIC and president of the Kansas City Council. Being a retired school teacher and a veteran SSG communicator, Betty was instrumental in the completion of the young investor course.

Needless to say, a project of this magnitude is usually not successful without a team effort. We had many NAIC staff and volunteers offer their critiques of the initial drafts, along with the talents of a professional writer, creative designer and project coordinator. Their names are prominently displayed on the back and inside cover of Investing For Life. We truly appreciate their fine efforts.

What can you expect from this new publication? Here is a brief summary of the course and how it is organized.

Its 26 chapters include 157 pages of educational materials and information, put together in a spiral-bound, laminated, foldout book graphically designed to appeal to mid-teens. Cost is $30 for members, $40 for others.

There are two major sections:

• Part One - A Life-Long Financial Plan
• Part Two - Investing the NAIC Way

Chapters are divided into the following sections:

• Goals
• Introduction
• Lesson
• Summary
• Key Words
• Self Test

Part One: A Life-Long Financial Plan

• Plan Ahead
• A Career Plan
• Managing Your Money
• The Power of Investing
• The Corporation
• The Investment Supermarket
• Buying and Selling Stock
• Stock Market Literacy
• Mutual Funds
• Choosing Mutual Funds
• Plugging the Leaks (inflation, taxes, & commission fees)
• Protecting Yourself (insurance)
• A Car and a House
• The Big Picture

Part Two: Investing the NAIC Way

• Writing your own success story
• Searching for companies to Study
• Accounting 101 - The Annual Report
• The Income Statement and the Balance Sheet
• Stock Selection Guide Overview
• Plotting the Data
• Trend Lines and Growth Rates
• Evaluating Management
• Estimating Future Growth Rates
• Price-Earnings History
• Evaluating Risk and Reward
• Five-year potential
• The Bottom Line
• Appendices

We encourage parents and grandparents to purchase the course for their "favorite young investors." Set a realistic goal (date) for completion of the course, for example, a chapter a week. Parents and grandparents with investment knowledge to share should help the young investor along the way. Ask them about what they are learning and answer their questions.

Investing For Life was designed for far-sighted, independent-minded young people who, thanks to the benefit of good guidance, are grasping the importance of creating an economic road map for their lives.

We hope this book will also inspire the formation of adult-youth mentoring relationships and the establishment of school and community-based investment clubs where young people can learn the principles of successful planning and investing under the tutelage of knowledgeable adults.

Editor's Note: Readers interested in sharing their experiences and stories about "young investors" are invited to contact Jeff Fox at NAIC e-mail: jdfox@better-investing.org.

Jeff is director of educational development for BetterInvesting. Readers interested in sharing their experiences and stories about young investors are invited to contact Jeffery Fox at BetterInvesting or at jefff@better-investing.org