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ASK most young people what the latest CD is by Nelly or Jay-Z and they not only can tell you the names of the music CDs, but they can also rap the lyrics to each song. But ask the same young people to explain the other type of CD, the money CD, and the answers won't come so readily.

Contrary to what a lot of young people think, a financial CD doesn't rap and can't be bought at Tower Records. A certificate of deposit, as you may know, is a major financial instrument sold in banks and by brokers. Almost all financial experts say young people, especially young Black people, should know more about them and more about other ways to invest.

The teaching should start early. Mellody Hobson, president of Ariel Mutual Funds, based in Chicago, says, "If your daughter loves Barbie, talk to her about buy'rog Mattel shares or give her gifts of Mattel shares for her birthday." It's helpful for children and young adults to see how their own buying translates into profit, she says. Even if they are investing in a toy company, they should really invest, not just watch how the stock does over time.

Stocks are the best investment for children because they are in it for the long haul and can ride out the ups and downs of the stock market. If a parent purchases $1,000 in a small company's stock at a 12 percent return when their child is 10 years old, that stock will be worth $2,048,000 by the time their son or daughter is 65 because, in addition to earning interest, the money doubles every five years, Hobson says.

Another way to invest money is with U.S. Savings Bonds that can be bought at a discount for denominations starting at $25. Though their interest rate varies, interest earned on bonds is tax-exempt. They can be cashed in six months after purchase or saved for up to 30 years.

Parents can also create a 401(k) plan for their children, similar to what companies offer employees by giving an allowance of say $5 for doing chores and then putting a match of another $5 into an investment account.

Opening a mutual fund account, called a Uniform Gift to Minors, is one way to invest and save on taxes because the account is in your child's name.

And don't forget CDs, which are another way of saving for the future. However, CDs are conservative, earning less interest than investing in the stock market. "CDs are for people who want to be sure they preserve their principal and don't want to put their savings at risk," Hobson says. "It's good for saving for a down payment on a house, but the interest rates are just above inflation."

Who says IRAs are just for people near retirement age? Parents can open an IRA account for their offspring as soon as they show that their child is earning money from any source, including an allowance. Parents can save up to $3,000 per year.

So you're not ready to open a bank account or invest in stocks or CDs for junior? Try using a color-coded bank at home to help your son or daughter learn to manage money. Each color on the bank represents a different use for that section. For example, the green area is for quick cash, like for buying candy. The yellow part is for saving for something special, like a video game. The red section is money for investments, and not to be touched. Or one of the sections can be used to donate to charities. Hobson says, "It's a way for children to think long term about money and also to create that long-term perspective on saving."

One father, Kenneth Stone, helped his daughter, Carrie, and son, Keith, develop a long-term perspective on saving when he taught them to save their allowance to buy things they wanted.

Stone, the president of the St. Louis Chapter of the National Association of Black Accountants, also set a good example by saving all the money they would need for college through his job's deferred compensation plan.

Stashing money away before it's spent is a good idea, but only if it's put in a safe place. This money-managing father tells his children not to put all their eggs in one basket, but to diversify their holdings. Stone suggests they invest 10 percent of their gross income, placing one-third in a high-risk growth stock such as a new-venture company with growth potential that doesn't pay dividends, one-third in an income-producing stock such as a utility company that can afford to pay dividends, and one-third in their employers' stock.

Stone has made enough successful investments--such as the land he bought that doubled in Value in four years--to start his son and daughter off with enough money to pay their first year of rent and give them each a car when they graduated from college. And that's a lot more rewarding than a stack of music CDs.