The Perfect Portfolio for Your Kids

Parents interested in teaching their kids about money should bypass the savings account, Cramer said Friday, and open a brokerage account. Investing is the best way to accumulate wealth, so they should know how it’s done.

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In honor of his “Mad Money: It’s a Family Affair” special, Cramer pulled together a portfolio of five stocks that worked both as long-term investments and as a way to get kids interested in the markets: McDonald’s, The Walt Disney Co., Hasbro, VF Corp. and Apple.

What kid doesn’t love McDonald’s ? They will also learn to love the company’s management, international growth and 3.4% dividend yield. And the yield, which pays out much more than any savings account right now, will teach young investors about the value of compounding reinvested dividends.

Disney, with its theme parks and Pixar films, is every kid’s favorite as well. Robert Iger has proved himself a great CEO, and the longevity of Disney’s brand make this a stock that could be owned for years.

Cramer learned a lot about what he knows of money from Monopoly, which is made by Hasbro . This company also works for a children’s portfolio, as it is a consistent grower and the stock is cheap.

While kids may know the Gap, and frequently wear the apparel maker’s clothes, Cramer thinks VF Corp. is a better stock to own. Owner of North Face and other popular brands, VF is a better business.

Lastly, Cramer urged viewers to buy their kids some Apple . After all, it’s only a matter of time before you’re buying them their first iPod – or iPhone. And this company is at the center of a secular growth trend – smartphones and mobile Internet – that should generate returns for at least the next few years.

Cramer's charitable trust owns VF Corp.

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