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Brandi Pace likes to swim, roller skate and watch a little television, typical fare for a 13-year-old. But the Columbia youth has one more hobby, and, considering her age, it's a little atypical. Brandi enjoys perusing her mutual fund portfolio.

Make no mistake about it. The portfolio's reports come to Brandi -- not her parents or the grandmother who got her started in the fund. They are written in kid-friendly language, and the portfolio includes companies with which young people are familiar -- such as Disney or McDonald's.

You see, Brandi is a "Young Investor," a holder of "kiddie stocks" in a thoroughly '90s scheme to cultivate mini-moguls by teaching them a thing or two about finances -- and earn them a few bucks along the way.

Kiddie stocks for kids is the brainchild of Stein Roe & Farnham, a Chicago-based financial company. "We've gotten terrific feedback from the kids and their parents for providing the fund and for providing the educational information," says Thomas W. Butch, spokesman for the company. Brandi has pronounced it "interesting and cool."

Kiddie stocks? The times, how they have changed.

Used to be that socking away a little money into the kid's savings account was adequate. Then there were those parents with the foresight and the funds to start investing for their kid's college tuition while the tyke was still in diapers.

But even when parents invest or save money on behalf of their offspring, the children are often left out of the learning process. Stein Roe confirmed that two years ago when its parent company, Liberty Financial Companies, commissioned a survey of high school students to find out what they knew about investing.

The company learned that students were interested in investments but "only one in five were knowledgeable," Mr. Butch says.

Based on that survey, Stein Roe decided to provide the "Young Investor Fund" and invested in companies that appeal to younger people.

Mr. Butch believes Stein Roe is the first company to offer a young investor fund with educational materials targeted to youngsters.

The year-old fund has its own Young Investor Hot Line -- (800) 403-KIDS -- for mailing information to interested families. It is a no-load mutual fund, meaning that there are no commissions involved.

But say a mutual fund is not in your child's immediate future. This is not, repeat not, one more thing that overworked, underpaid parents should feel guilty about, says Debra Sherwin, a certified public accountant and associate professor of management at Goucher College. A parent's goal should be educating a child about money.

"It doesn't have to be that sophisticated," she says. "You take kids to the grocery store and they see money being spent. Or to the toy store. You can start by giving a young child $1 a week and having the child save some for a present for grandpa's gift. You can teach kids how to be responsible in many ways."

The families who choose Stein Roe as one of those ways often refer to the mutual fund (which is technically set up as a custodial account) as "kiddie stocks." Among the companies included in the mutual fund portfolio are Microsoft, Coca-Cola, Nike, the Walt Disney Corp. and McDonald's Corp. "We are investing in strong companies," Mr. Butch says.

The company is practically crowing over the first year's performance of the fund, which has grown to more than 6,500 shareholders and has more than $20 million in assets.

"Look How Your Money Grew!" reads a headline in its Dollar Digest newsletter, which the young investors receive quarterly. "In its first year, the Young Investor Fund earned a total return of 15.45 percent. This means if you had invested $1,000 on 4/29/94, your investment would have grown to $1,155. "

So far, Brandi is pleased, but it is too soon for her to see much of a profit.

It was her grandmother, Bertha Turner, who first learned about the fund.

"I thought this was something that would be really good for them," says Mrs. Turner, who invested $1,000 for Brandi and for her other granddaughter.

Brandi was curious. "When my grandmother first told me about it, she asked me what I knew about stocks and mutual funds," Brandi says. "I said, 'Nothing.' I wanted to know what it was about.

"I looked through the information that she gave me and I saw Nike, which is really hot. And Coke, and other companies that I had heard about. I could see some of the things that the money was invested in," Brandi says.

One of the ways that the company draws the interest of young investors is through the Dollar Digest newsletter, which includes quizzes and games focusing on money and financing.

One newsletter featured stories on Nike and included this quiz: "Which of the following is not part of the Nike product line. Team uniforms, cheerleading shoes, leotards, aquatic shoes or ice skates?"

The young people also receive a personalized certificate and an activity book with more games. Some young investors write to the fund managers and even suggest stocks they might be interested in.

"The fund managers read the reply cards," Mr. Butch says. "A lot of the stocks are already ones that we hold."

The next lesson

Besides the educational aspect (and, of course, the goal of earning money on their investment) Mrs. Turner uses the fund to teach her grandchildren financial responsibility. She has told them they are free to do whatever they want with the money when they become of age.

However, she is urging them to think long and hard before using the money and hopes they won't blow it on something like a new wardrobe. "I am hoping they will let it stay there and grow," she says.

Initially, Brandi was perplexed when her grandmother left it up to her.

"Grandmother at first told me that I could kind of do what I wanted to do with the money," Brandi says.

"I was kind of surprised that she said that. But then she said if I took it out, it would have to be for a good cause. Not to just take the money out and go to the mall or something."

The company cautions investors that stocks can be unpredictable, and the idea is to shoot for long-term growth.

That is an important caveat, Mr. Butch says.

"Holding on to stocks for a long time, which is one of the principles the fund seeks to teach, evens out the effects of short-term swings in the market," he says. "In many cases, by the time the investor reaches adulthood, he or she already will have held the stocks for a great many years."

The right way

So far, Brandi is noncommittal and not thinking that far in advance. But she has learned that a mutual fund is money invested in a group of stocks, bonds and/or other securities. That knowledge alone makes her stand out among 13-year-olds.

It's not that most children don't care about money. Ms. Sherwin says that "children show an interest in money at a very, very young age." She adds that no parent should rely on schools to teach the subject.

"Just like parents should be teaching kids about sex in the home, they should also be teaching kids about money in the home," Ms. Sherwin says. "Because just like sex, if they don't learn about it at home, they will learn about it from their peers -- and it will be wrong.

"People get into all kinds of trouble over money," she says. "If you can't control your finances, you can't control your life."

Stein Roe has discovered that it's not only the younger set that needs basic help with money and investing.

Many childless adults have inquired about the Young Investor fund. And the company has never turned away money -- no matter the investor's age. In fact, it's busy "tweaking" its advertising in national financial magazines to market this same fund to the big folks.

By the way, for the young and not-so-young investors who may not have known: Nike does not make ice skates.

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