Experts say that encouraging children to follow the stocks of established companies that make products they like is a great way to develop an interest in the stock market. It could spark a lifetime appetite for smart investing.

So to kickstart a juicy dinner-table conversation on the topic, look no further than recent developments at three companies your kids probably know and like. Explaining how those companies earn their money can lead to a discussion of how people who own shares in those companies also can make money—and how they can lose it.

Mattel, which early this year released a new, well-received lineup of Barbie dolls that come in various sizes—curvy, tall, and petite—had better-than-expected earnings in the second quarter, sending the stock higher.

Mattel got other good news too. Earlier this month, it won the right to sell "Jurassic World" toys starting next year. You can explain to your kids that the good news for Mattel was bad news for Hasbro, which until now has had the license to create those toys. Hasbro's stock fell on the news.

And then there’s the blockbuster Pokémon GO, which doubled the share price of its maker, Nintendo, within a couple weeks of its U.S. introduction on July 6. The stock's rise made people who own the shares much richer—at least on paper. Now that the hysteria is subsiding, the stock is floating back to earth. (Also read Four Things Parents Should Know About Pokémon Go.)

These examples can lead to a conversation about how stocks move, the risks inherent in owning shares, how some companies' shares are safer purchases than others, and how easy or difficult they are to buy.

"Whether you create a mock portfolio or buy a very small number of shares, [investing in companies that interest kids] is a great way to introduce them to the world of investing in a fun and tangible way," says Robin Taub, a Toronto-based financial consultant and author of a "A Parent's Guide to Raising Money-Smart Kids." (Be aware that Nintendo stock, available on the U.S. over-the-counter market, takes a riskier form—called an “unsponsored American Depository Receipt” —than the typical U.S. stock sold on the Nasdaq and New York Stock Exchange.)

Why Start with Individual Stocks?

Personal finance experts often recommend that adult investors stick to exchange-traded funds or mutual funds, which hold shares from many different companies. That diversification can reduce your overall risk if an investment plummets.

But when it comes to kids, parents should introduce them first to individual stocks, says Chris Chaney, vice president at Fort Pitt Capital Group in Pittsburgh. 

"Kids feel a sense of identity with certain companies; they can say, I own a piece of that," Chaney explains. "With an index fund, they’re not going to feel that same pride."

Chaney recommends working with a financial adviser to find good, quality companies for your youngster to consider. As your progeny and their investments grow, you can introduce new discussion topics, including the importance of diversification, the impact of taxes and fees on investment returns, and the value of a buy-and-hold strategy where you stick with an investment for the long haul.

Kids can also learn more about investing through The Stock Market Game, sponsored by the SIFMA Foundation, part of the Securities Industry and Financial Markets Association. It's free and open to individuals, and to student "teams" sponsored by schools. Online, children also can search for individual analysts' takes on their stocks. 

Learning Patience, Dealing with Disappointment

To be sure, starting your kids in the market early isn't just about giving them an education. They could very well benefit from the long-term growth of their holdings. Investing $500 a year in a low-cost Standard & Poor's index fund within a tax-free account like a 529 education plan, for instance, would garner about $20,000 in 20 years. That assumes an inflation-adjusted, average rate of return of 6 percent—on the low side, historically. At an average, 7 percent, that amount would rise to nearly $24,000.

But young investors must also learn that stocks can fall. Like losing in a game of soccer or softball, dealing with the disappointment of investment losses is part of the learning experience. Parents will need to provide the perspective. 

"Stock prices never go up in a straight line; there are lots of random movements up and down," Taub says. "That's just how it goes."