Head start.

THE SPRINGTIME OF LIFE MARKS GROWTH--mental, physical and social. It is a time when everyone between the ages of three and 19 ought to be learning basic money concepts and the fundamentals of investing. The reason is simple, say experts: young people need to have an appreciation of the American economic system and an understanding of how capitalism works in order to get a head start in the world of investments.

Most African Americans don't get that financial knowledge when they are young, however. By the time they are older, barriers are built between them and their money. They tend to put their cash in low-interest checking and savings accounts.

And teenagers are definitely consumers. According to Teenage Research Unlimited, h market research firm based in Northbrook, Illinois, by the end of 1998 teens had pumped approximately $141 billion into the economy through purchases that included soft drinks, CDs, fast food, clothes, computer games, movies and athletic footwear.

But don't think that all teens are merely big spenders, throwing away wads of cash on a variety of consumer goods. A growing number of adolescents are expending as much effort investing their money.

More parents and financial advisors are teaching kids the ABCs of money--how it is spent and accumulated. This financial education process often begins by age five, although even preschoolers know a quarter equals 25 cents. By age 10, though, a child ought to understand comparison shopping and the value of merchandise, as well as have a savings account and understand the principles of banking, say financial planners. By age 12, young people should be able to conduct their own transactions, and save, invest and budget their money. Once a teen starts working, they are ready for goal-oriented financial planning. Just like adults, young people need to define their financial goals: Am I looking to buy a car? Help pay for school?

Aside from their youthful exuberance for the market, young investors tend to hook into one of the key tenets of wealth accumulation: invest in companies whose products you use. Most are shareholders of the very same businesses of which they are big consumers, including fast-food giants like McDonald's (NYSE: MCD), footwear makers like Nike (NYSE: NKE), soft drink companies such as Coca-Cola (NYSE: KO)and high-tech companies like Microsoft (Nasdaq: MSFT).

One day, these young investors may find themselves working in corporate America, trading on Wall Street or running their own companies. But for now they are learning the benefits of owning a piece of America.

LESSONS FOR GENERATION NET

"Generation Net" is the latest label assigned to today's teens, presumably because they are lost souls in the technological world of the Internet and high-tech computer games. Ask Amadi Anene and his friends, and they will tell you they are part of an up-and-coming generation--underage investors. The Detroit native is cofounder and vice president of the Young Investors Club. The three-year-old club has 11 members ranging in age from 12 to 15, and has amassed about $500 in holdings in three companies, Walt Disney (NYSE: DIS), wireless communications firm Datalink (Nasdaq: NETD) and fashion powerhouse Donna Karan International (NYSE: DK).

Like most of his peers, 13-year-old Amadi spends his allowance and cash gifts on PlayStation video games and sports apparel. The young athlete plays power forward on his junior high school's basketball team. But he also diligently sets aside at least 25% of his $15 allowance every two weeks to invest in the stock market.

Amadi, who's following in the footsteps of his mother, Janice, co-founder of Mainstream Investment Club, says he wants to learn as much as he can about investing so that he can build a solid financial foundation for the long term. That could mean saving money to help buy a car down the road or help his parents send him to college.

"I like investing and buying different stocks, because it's a good way to [accumulate wealth] and to put moneyback into your own pockets when you purchase shares in companies whose products you buy all the time," says Amadi. Members of the Young Investors Club take what they do very seriously. Dues are $7 a month, and anyone who fails to come up with his share of the pot gets hit with a $2 late fee.

Each month the members meet and report on their stock of choice. Amadi was eyeing Wendy's International (NYSE: WEN), Sara Lee (NYSE: SLE) and Coca-Cola. After examining the stocks' fundamentals--their price and earnings histories--he settled on Coke, but not for the club's portfolio. Instead, he decided to purchase shares in the soft drink maker through his parents' broker for his personal portfolio.

"I have been following Coke for a while," the junior high school student explains. "We buy a lot of Coke for the house. The company also puts out a lot of other products that we buy. So I felt it was a good stock to buy."

Amadi and his fellow club members are putting into practice many of the principles outlined in past issues of BLACK ENTERPRISE For Teens and Kidpreneurs News [TM] sister publications of BE. These include tips on how to invest, start your own investment club and how to manage your finances.

INVESTING IN MICKEY MOUSE

Every time someone shouts, "I'm going to Disney World," even-year-old Martin Wilson knows he's getting paid. It was a year ago that he noticed his mother, Marjorie Grace, looking at the stock tables in the Wall Street Journal. At that time, he realized that he didn't have to

read words, but that he could read numbers. "I explained to him that there were some interesting companies in here [the paper]. And I cited Disney as an example," explains Grace, president of Grace Financial Royal Alliance, an investment firm in Oakland, California. "I told him that you can buy interest in Disney. He asked if that means he got to go there every day. I said no, but people who do have to pay you. He rubbed his hands together and re-plied: `Well, let's get some of that [stock].'"

Today, Martin has about $200 invested in Disney and another $1,500 invested in Lucent Technologies (NYSE: LU). The second grader understands that technology and telecommunications are hot industries. Better still, he knows that by buying tech stocks, he is making money from his fondness for cable and the Internet. Martin has also jumped on to the craze over Nintendo's popular game Pokemon by purchasing $200 in shares in the company behind the mania, 4Kids Entertainment (Nasdaq: KIDE). He also has about $9,000 invested in a growth and income mutual fund.

Most of the money he uses to invest comes from birthday presents and cash gifts at Christmas--about $4,000 in total over the past four years. Martin also snared a gig as a model for trade books targeting school districts across the country; a big chunk of his income from this job went into the stock market.

At the tender age of three, Martin was big on saving. During family outings to McDonald's he would ask for the change. When his mother inquired what he planned to do with that money, he told her: "Put it in my bank account." The aspiring pilot often explains to his peers, and even to adults, that as a shareholder, he is an owner of two major corporations. He holds steadfast to principles he learned before he was five. Take whatever money you get and divide it among three things: (1) saving and charitable giving; (2) spending and (3) investing. He'll be able to use the money he makes from his investments to help pay for his college education and obtain the necessary training to fly, says Grace.

IN THE MARKET AT 16

Khari May and his younger brother, Osei, have been investing since they were 16. The two brothers, now 22 and 18, respectively, received a cash Christmas gift from their parents for the sole purpose of plowing it into the stock market. It was in December of 1993 that Khari received $300 from his parents and was told that they would match any money he added to the account. He put in $200 from his savings, bringing his total initial investment to $700.

The oldest May son bought shares in three companies he was familiar with: Blockbuster, a unit of Viacom (NYSE: VIA. B), Snapple, formerly owned by Quaker Oats (NYSE: OAT), and Disney. He faithfully reads stock tables and reviews annual reports and other financial data he receives as a shareholder to keep abreast of the stocks in his portfolio, which is now valued at more than $1,000. His brother also has stock in such companies as Washington, D.C.-based savings and loan Independence Federal Savings Bank (Nasdaq: IFSB), biotechnology firm Immune Response (Nasdaq: IMNR) and retailer Kmart (NYSE: KM).

The May brothers are learning firsthand the power of investing and compounding from their father, Abraham. One portion of the elder May's portfolio--an IRA account he opened in August of last year--had a return of 25% in the first nine months. A city administrator, May has been investing in the stock market since 1984. The reason he opened accounts in his sons' names was because he wanted them to begin to understand the difference between income and wealth. "With income you work for your money and with wealth accumulation your money works for you," he explains. "I'm hoping that they will be in a position when their sons and daughters are ready to go to college that their tuition and expenses will be paid for."

Khari works part-time for the New York City Board of Education and is a student at Baruch College in New York, where he is studying business administration and computer science. He's looking to beef up his stock portfolio and to contribute more on a regular basis, realizing that he is investing for the long term.

to-do list

Start an investment club with other teens

Put aside a portion of your allowance or income for future savings and investments

Buy stocks in companies you know

asset allocation -- teens

13-year-old teenage boy * lives in West Bloomfield, MI * member of an 11-member investment club * club has about $500 among all the members * contributes a third of his biweekly allowance of $15 to the club's coffers.

This is a great age to start investing. An investor's time horizon significantly impacts investment results. The proper selection of a growth mutual fund with top holdings in either technology, pharmaceuticals or telecommunications would be a wise starting point. However, the one-time investment of $500 may narrow the selection, since many Mutual funds have a minimum investment of $1,000. I would encourage them to call Alger Funds for a free prospectus. All investors should read the prospectus carefully before deciding to invest.

SOURCE: MARK SPRADLEY, LEGG MASON WOOD WALKER

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