What’s the best way to teach your children about investing? Three mutual funds are pitching to parents, through special “kid investment” programs.

But think about it before you climb aboard. In two cases, the “kid” bit is almost entirely a marketing ploy. The funds are etching their brand name into tomorrow’s consumers. And they’re angling for parents (or grandparents) who are planning to make college investments. If all you want is to give your children a start, however, there are other ways to go.

The kid funds do offer some colorful educational materials, if you think your youngsters will read them. But to cover the cost, they charge you higher expenses than average. The three options:

1) The one most specifically focused on children is First Start, a 15-month-old mutual fund from USAA in San Antonio, Texas (800-531-0553). It looks for companies whose products or services kids might know.

You’ll see a lot of familiar names: Gap, Hershey Foods, Walt Disney, Microsoft, McDonald’s, PepsiCo, Campbell Soup. Other stocks will be mysteries, however, unless kids look them up (Medtronic for pacemakers; Schlumberger for oil-drilling equipment).

The prospectus is written as clearly as these things can ever get although it’s still parent material, not for 10-year-olds. As for the report to shareholders, you’ll have to judge whether your children will find it hip.

“Your life is full of all kinds of real cool stuff,” writes fund manager Curt Rohrman, 35, as he introduces two of his stocks. “Are you jammin’ to the tunes with Clear Channel Communications?” (a company that “owns a ton of ratio stations”).

A bimonthly newsletter answers kids’ mail and explains investment concepts. Ten-year-olds might like the mail. The investment stuff seems more for parents and interested teens.

Minimum investment: $3,000 for an individual account; $250 in custodial accounts for minors; $20 a month, if the money is moved automatically from your bank account. Annual expenses: 1.65 percent.

2) The 4-year-old Stein Roe Young Investor Fund (800-338-2550) comes with an activity book (money games for parents and young children), a newsletter with a strictly adult vocabulary and other educational materials.

“In all frankness, maybe we should have called it just the Investor Fund, because the parents read the material as well and need education just as much as the kid,” says Erik Gustafson, 35, the fund’s co-manager.

This fund invests its money in Stein Roe’s normal Growth Investor Portfolio, which doesn’t specifically search for kid-friendly stocks. Stein Roe says only 65 percent of the portfolio is invested in companies that “directly or through one or more subsidiaries affect the lives of young people.”

So the newsletters are really the kid stuff, not the fund itself. Minimum investment: $2,500 for an individual account; $1,000 for a custodial account; $100, followed by $50 a month for an automatic investment plan. Annual expenses: 1.43 percent.

Both First Start and Young Investor are no-loads, meaning there’s no upfront sales commission. But their expenses show up poorly compared with those of other large, no-load growth funds. The industry average is 0.97 percent, according to Morningstar in Chicago.

3) American Express Financial Advisors provides a program called “Kids, Parents and Money” to investors in its 30-year-old IDS New Dimensions fund.

Amex touts the fund as having kid-friendly stocks. In truth, it’s an ordinary growth fund that happens to own Nike, Coca-Cola, Mattel and a few other names that kids might know.

The kid stuff is the overlay: a game book, newsletters and teaching materials that steer people to an Amex financial advisor. Minimum investment: $2,000 for individual accounts; $500 for custodial accounts; $100 a month for automatic investment plans. New Dimensions is a load fund, meaning that sales commissions are built in.

Now the payoff question: Are funds with kid newsletters the way to go?

Planner Gregory Galecki of Galecki Financial Management in Fort Wayne, Ind., says that depends on your intent. If you want to teach kids about stocks, give them McDonald’s or Disney and let them follow the company. If you want them to learn about managers and long-term investing, go to mutual funds.

But you needn’t use “kid” funds. The key lies in making kids aware, says planner Carol Wilson, of Wilson Financial Advisors in Salt Lake City. She uses Stein Roe Young Investor, to get kids’ attention, but says that any long-term growth fund will do.

Wilson has this good idea: Buy your kid shares in your own mutual fund, so you’ll have a common investment to talk about.

Roths prove tough sell

You can lead a horse to water, but you can’t make him … well, you know.

The financial industry has been leading savers to the new Roth Individual Retirement Accounts. But not very many are swallowing the idea.

At Fidelity Investments in Boston, only 5 percent of traditional IRA owners have switched to a Roth. At Wells Fargo Bank in San Francisco it’s only 0.6 percent.

That’s too bad. Roths can be a terrific deal, for the right people.

What’s more, an important deadline looms. You have to report, as taxable income, any IRA money moved to a Roth. But if you switch by Dec. 31, the income (and tax) can be spread over the next four years. If you wait until 1999, the tax will be due all at once.

There’s a later deadline for working people who want to contribute to a Roth. You have until April 15, 1999, to open a Roth and still count it as starting on Jan. 1, 1998.

There are two big differences between Roths and other retirement plans:

First, with regular IRAs, 401(k)s, Keoghs and similar plans, you tax-deduct your contributions and are taxed when you take the money out. With Roths, by contrast, there’s no upfront deduction. Instead, you’re allowed to withdraw your investment earnings income-tax free, as long as you follow all the rules.

Second, most retirement plans force you to make withdrawals starting at age 70 & #733;. But Roths don’t have to be touched. Any money left in them when you die goes to your heirs income-tax free.

Syndicated columnist Jane Bryant Quinn can be reached in care of the Washington Post Writers Group, 1150 15th St., Washington D.C. 20071-9200.