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Photograph by George Sakkestad

Young author Monte Malhotra wrote a book about saving and investing that targets readers his age.

Malhotra's book shows it's never too soon to invest

By Marianne Lucchesi Hamilton

While the kids in Monte Malhotra's class were reading the comics, he was riveted by a slightly different section of the newspaper.

Each morning he'd eagerly scan the headlines in the business section, and gauge the yen's previous-day performance. Still, when he asked his parents for an advance on his birthday and Christmas checks so he could do some investing, they were understandably skeptical.

He had, after all, just turned 9.

Today, the Saratoga native--who's about to report to Stanford to start his sophomore year--has transformed that early love of all things financial into a lifelong goal: To help young people understand the importance of saving and investing their money. Toward that end, Malhotra has published a book on the subject, called The Young Investor's Guide to Retiring Young (PublishAmerica).

Earning respect in either the financial or publishing domain is no small feat. Malhotra has managed to do both with the book he started writing when he was a sophomore at Saratoga High School. But he says putting his advice into writing was just a natural evolution of what has been a passion for half of his life.

"The markets of '98 and '99 were a really exciting time, and when Yahoo! Finance started their 'fantasy portfolio' competition, I put one together," Malhotra recalls. "I always ended up in the top 10 to 20 percent of the competitors, in terms of how my stocks performed."

But when the younger Malhotra asked his parents for all of the money they might ever wish to give him as gifts in the next five years, "the obvious answer was 'no,' " Malhotra laughs. "Who's going to hand a 9-year-old their hard-earned money to invest?"

After Sushma Malhotra, then a manager at AMD, got some counsel and encouragement from her friends, she relented, and opened a $2,000 Charles Schwab account for her son. Husband Kuldip, an engineer at LSI Logic at the time, also had been hesitant to open his wallet. But after observing Monte's market prowess, he too agreed to the experiment.

"We didn't have broadband back then, so Monte used dial-up to check his fake portfolio," says Kudlip. "If he yelled 'YES!' I knew his stocks were up. When this trend continued for another year, we knew Monte was serious, and investing would be his passion."

Malhotra's first real purchase was Vermont Teddy Bear stock, which he says was ideally suited for a young investor. "It was a fun product, and its product cycle was something kids could understand: Sales peak during Christmas, Valentine's Day and Mother's Day, and they charge roughly $100 a bear, so the margins are high."

Early on, several of Malhotra's friends caught the investment fever as well. Their mutual love for fast food led to purchases of KFC stock. "We all realized we love to eat Taco Bell food, so we bought their stock. We've become a lot more sophisticated now, but those were really fun times."

At Saratoga high, Malhotra formed a small club of like-minded finance fans. But he noticed that most of the student body tended to be of the spend-today-worry-tomorrow mindset. Thus, Malhotra started writing his book, hoping to motivate his peers to start saving.

"Most books on investing are written by older people; I thought the best way to reach out to my friends would be through a book written by a younger person that would show that they could have fun investing."

Malhotra's book is now available online via Barnes and Noble and Amazon, and at the Stanford bookstore; currently he's putting together a business plan to help the book achieve a wider distribution.

"I figure I'm from the generation that the book is targeting, so as much as possible I'm going to use the tools our generation uses, such as social networking sites, blogs and the Internet," Malhotra notes.

As Malhotra works toward a degree in economics, he continues to counsel his friends to watch trends to anticipate what stocks to buy. And no matter what, he urges everyone to put away a chunk of cash regularly. "My goal is to show the average person that he or she can retire with a million, or a million and a half in the bank," Malhotra says. "With just a little financial discipline, even someone with an income of $50,000 a year can achieve wealth."

For young or old, purchasing Malhotra's book would be a sound investment.