My 11 year old daughter buys her first stock.

So out of the blue one of my daughter (the youngest one) asks if she can buy some stock.

Where do i start?

Shes only 11 but my eyes lite up when she asked but i was more worried in how to go about it without it sounding too boring or complicated. How could i making investing in stocks sound exciting to a 11 year old child? Fortunately for me she was pretty excited and i pointed her in the direction to look up Warren Buffet. She soon picked up on the fact that hes the worlds second richest man.

"At the age of 11, Buffet went into the stock trading business with his sister, Doris, buying six shares of Cities Service, an oil service company, at $38 a share. Buffett had identified Cities as an undervalued stock and was confident of making a nice profit for himself and his sister. Unfortunately, the stock lost almost a third of its value within just a few weeks of Buffett purchasing it.

Despite his sister berating him continually about their dwindling fortune, Warren held onto the stock until it rebounded to $40 a share, when he closed the trade for a $2 per share profit. After cashing in, he then had the unpleasant experience of watching the stock rise to over $200 a share without him" 

I explained to her about price to earnings, debt ratios, company size, future growth and finally the dividend. I know ive not explained everything but we all have to start somewhere and after all that  i was exhausted, though pleased she managed to grasp it , maybe not fully but enough to start looking at stocks.She's still hungry for more information.

Looking at stocks

There are three stocks she has put in her watchlist they are: Barret Developments  LSE:BDEV , Secure Trust Bank LSE: STB and Taylor Wimpey LSE:TW. The nice thing about these stocks is that none of them came on my radar before but now i'm also interested. The one though that she wanted to invest in initially was Hays LSE:HAS . This company is trading at a yearly low, undervalued by around 18%, 13.7 PE, 9.3% expected annual growth, Past earnings growth over the last 5 years has been 15.8%. No debt, dividend payout ratio at 33% with the dividend at 5.6%. Dividends have increased over the past 10 years.

Well that stock sounded fair enough for me to invest in so now it was time to find a trading account for her. 

Ideally i wanted one like the US Robinhood but unfortunately the UK does not have it so i had to do some digging around. In the end i found a site called trading212, it has free commission and you can purchase as low as just one stock. The downside though is that no drip option is available. The maximum account size is 30K so i think that's quite big enough for the moment :). 

We've decided to give our daughter initially £10 per month to invest , so we've credited her account with £120.

Hays LSE:HAS was her stock purchase for November . She's already looking forward to this Monday so she can buy another. Currently she's thinking of buying Taylor Wimpey LSE:TW.  

Where is the money coming from?

My children all have bank accounts since they were born. Money has been deposited over the years from birthdays etc. The interest rates are really poor so i'm happy to take money out on their behalf for them to put into stocks instead. We''ll see how it goes first but if all is well and the enthusiasm stays then we could increase their allowance in the markets to £20/£30 month. 

Conclusion:

Looking back i wish i had done this as a child but unfortunately my parents weren't in the position to understand markets let alone invest in them.As parents we try to raise our children to a better standard that we ourselves were raised (i think that's natural parenting)and hopefully my daughter will stick at it. There's nothing holding her back except the willing to do or not to do it.

Do any of your children invest and whats your experience?

 What could I do to maintain her interest?