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Trick, treat or trade? Ask your kids this Halloween

Chuck JaffeChuck Jaffe ·

It’s going to be a “Trick, treat or trade” Halloween at my house this year, and that has nothing to do with the stock market.

If you want to teach your children and the kids in the neighborhood a lesson about money, risk and, yes, trading, you might follow my lead and swap cash for candy on Halloween night.

It won’t send you to the poor house, but it will send the kids home talking about what you have done. And, if my experience from last year holds again in 2017, it won’t leave your house covered in eggs or toilet paper.

Here’s the back story and how I am changing things up to add a trading component to it this year.

Last year, I created a drawing for costumed children in third grade and up (younger kids got candy like any other Halloween). I offered the kids the chance to take three fun-sized pieces of candy — a value of roughly 37.5 cents — or a coin envelope they picked from the money basket.

I made up 50 envelopes – we get 80 to 100 trick-or-treaters in my neighborhood each year – each with a minimum of a quarter in it, with one jackpot envelope holding $5. I made the kids aware of those parameters when offering them the choice.

All 50 money envelopes were scooped up by children. Only four age-eligible kids chose candy (and two children who came too late wound up with candy when the envelopes were gone, but noted they would have taken the money).

It was my personal twist on the “Cash for Candy” campaign pushed by the Financial Educators Council (NEFC). (I also am in favor of the Halloween Candy Buy Back, a nationwide effort held mostly at dental offices that removes excess treats from kids while also supporting US troops; you can get more details on participants near you at www.halloweencandybuyback.com.)

My results from last year didn’t surprise me; being the only house in the neighborhood doing something different made the money the obvious pick. The best part, however, was hearing from my neighbors who loved discussing my cash-or-candy option when the kids got home and opened their envelopes.

So this year, I am taking my efforts a step further, hoping to open kids up to lessons and discussions about money, value, risk and more. I’m adding an element of trading to the game, because if children think about the choice I am offering them, they will be factoring risk and reward into the picture.

On Tuesday night, costumed children in grades three and up will have three options:

1) Take three pieces of fun-sized candy, 2) Take no candy, but pick from the money basket, where every envelope has at least 25 cents in it with a maximum of $3, or 3) I take a fun-sized candy from the child’s bag, and they pick from the “big money basket,” where the envelopes contain 50 cents minimum up to a $5 grand prize.

I expect most kids to take money, but few to let me take a piece of their candy.

And yet giving me candy in exchange for a chance to win the big jackpot is the best deal. It is clearly the best trade here.

The candy itself, as noted, has a value of 37.5 cents. Trade that value for an envelope and you could lose 12.5 cents – if you pull a minimum envelope – or make a maximum of eight times your “investment” if you pick the $3 envelope.

By comparison, letting me pick a candy adds 12.5 cents to the value of the play, but with a minimum of 50 cents in the minimum “big money” envelope, there is no real possibility of loss. And the $5 jackpot means that the reward is 10 times the risk.

You don’t have to be a stock trader to understand that a potential reward of 10 times your investment – with no real possibility of loss – is a great deal.

But whether the kids will understand that innately is a good question. I recently talked with a neighbor child about doing “cash for candy” this year and was told in no uncertain terms by a 10-year-old that I would not be getting a piece of her candy.

Even if you find the whole idea silly, the intentions and motivations are good.

There’s no denying the obesity problem in this country — sadly, I personify it myself — and no child needs to consume a mountain of candy. Encouraging moderation is good.

Encouraging talks about money is even better.

Whether you do it yourself or not, find out what your kids would do if they came to my house. Ask them to try to figure out which deal is best; help them see the value of their trick-or-treating – where candy is like the wage they get paid for the time and effort they put in – to see if they would risk dollars on this deal rather than candy.

The trade here, in the end, is mine. I’m trading some cash – and some candy – for the chance to feel like Halloween is about more than sweets and silliness.

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   Chuck Jaffe is editor at RagingBull.com; he a nationally syndicated financial columnist and the host  of “MoneyLife with Chuck Jaffe” (moneylifeshow.com). He is a long-term investor and does no short-term trading of stocks, options or ETFs. You can reach him at chuck@ragingbull.com.

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