Air Jordans or Money for College?

Or their first car?  Down payment on a house?

The biggest problem I have with expensive sneaker culture is rapid disposability. You buy the shoes, but they’re “out of style” in 3-6 months!

@MrsDjRass Tweeted me:@kimmaytube Eh. Not true for Jordans. I don’t have any, but they are considered “gym shoe culture” classics.

Sure, Air Jordans may be classics, but here’s the thing—once next years hot new “it pair” arrives? Nobody is going to be breaking down doors for last seasons edition.  Know what I mean?

Now lets talk investing lessons for kids.  

Ok. So I was curious. Looked up Nike’s stock price as far as Dec. 1980 (the year they went public)

Here’s the scenario. Say its the year 2000 and a kid (who has no job) wants a pair of $180 Air Jordans. The adult says “No, but I’ll buy you shares in Nike”.

And since in the year 2000, Nike was trading at about $25 a share, the kid would be able to purchase about 7 shares in Nike.

(Note:  My numbers are approximate.  I round up, I round down.  Some math doesn’t work out cleanly cause I exclude pennies, but the actual figures are very close. Example: 7 shares would really cost $175 )

$180 shoe money/ $25 per share in Nike = 7 shares or $672 in year 2011

Now fast forward today.

As of yesterday, December 23, 2011 (11years later) Nike’s trading price was $96. So the kid (now a teen) would’ve gained $71 a share. His onetime investment and paper gain would be $497.  Add in his initial $180 investment and he has a total of $672 eleven years later, just by foregoing Air Jordans for one year.  In fact, by now, he could’ve easily forgotten wanting those shoes as a younger child.

Had the adult bought him 11years worth of Air Jordan shoes, spending $1980 all at once in stocks at the 2000 Nike trading price? The kid (now a teen) would have gained $5,609. Add in his initial investment of $1980 and he has a total of $7,584 all because he chose Nike stocks over Nike’s Air Jordan shoes.

$1980 shoe money/ $25 per share in Nike = 79 shares or $7584 in year 2011

How many teens do you know that wouldn’t want $7,584 in their hand?

None of this includes trading fees or capital gains taxes, etc. but the point is this. That kid would’ve GROWN out of 11years worth of Air Jordan Nike shoes.  Basically, the Air Jordan SHOES would’ve held no value, assuming he actually wore them.

Far fetched story? Not quite. Meet Damon Williams a 15yr old from Chicago with $50,000 portfolio - Smart Mommy! VIDEO:

Notice that Damon’s mother doesn’t deny him what he wants.  She simply taught him to delay gratification, learn the basics of investing and encouraged him to seek ownership in the companies and brands he loves.

If you’re wondering why the super-rich 1% (or America’s 15% upper/ upper middle classes) can live guilt free, enjoying their wealth, it’s for this simple reason.  They know that even if you gave “certain people” money, they wouldn’t know how to appreciate, leverage or respect it.

Life Lesson: Enjoy your life and your money in moderation. Earn. Save. Invest. Spend & Give.

A fool and his money shall soon part.