Trongersoll
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Post by Trongersoll on Apr 10, 2012 15:38:26 GMT -5
I have a friend, She's 19. We talk a lot, we are interested in mostly the same things. So my talking to her about my investing naturally got her interested. She said she'd like to do that someday. She waitresses and goes to college. Her mother has been on her about her spending all the money she makes, not saving any.
Really, what kid is going to put money in a savings account that gets virtually no interest? So i told her, why wait to invest, start now. 40 years from now, when she is my age she should have a nice nest egg to retire on.
So, Sept. 2011, we openned her a Schwab brokerage account with $1,100 in it. Now, at 19, she is far more interested in going to a club to hear dubstep, than researching investments. But, she does understand making money, she has been waitressing since she was 15.5 years old. So, i decided that i'd recommend her investments for her. My first goal was something that would be realtively safe, and give enough of a return that should could see her money growing. I explain to her everything we do and why, it will all make sense to her someday.
We started with 52 shares of the ETF SDY (one of my favorites). We auto-reinvest dividends so there is no brokerage fee for that. as of last month she was up over $100 between dividend and price increase. (this week is erasing part of that, but that is short term) She is impressed with the return and it helps keep her interested.
In addition, she is adding $100 per month (most months) That i'm putting in Schwab's ETF SCHD because they don't charge a brokerage fee for their own funds.
My current plan is when she has $1000 of SCHD to sell it and put that money in FE reinvesting dividends.
I've convinced her that she is in this for the long term, so i have to look for investments for her that will stand the test of time after i'm gone. But, i also have to be a bit conservative because if she sees too big a dip in her investment (she understands the ups and downs) she may panic and throw in the towel. At this early stage, positive reinforcement from the market is needed.
In June, her birthday month, we are planning on openning a RothIRA for her. Without the positive experience of her brokerage account, I never would have been able to sell her on an IRA. For her IRA i'm planning on starting with the index ETF SPY. We will follow this with a Europe Dividend ETF, then a Pacific rim Dividend ETF. I was going to go with Austrailia and south America ETFs as well but i'm thinking that maybe ABCS ETF will cover them well.
I will try to continue to postting updates to this thread as time goes on. I wish i had started investing seriously when i was 20.
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rovo
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Post by rovo on Apr 10, 2012 22:20:00 GMT -5
It sounds like a reasonable plan but like any plan it can be derailed by Mr. Market. In essence she is going to dollar cost average into the ETFs since she is making monthly deposits. There are pros and cons to DCA but at her age and with the small amounts being invested it seems like a decent approach.
The most important thing is to build the concept of making the deposits despite the lure of just spending the money. Good luck with that. ;D
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Trongersoll
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Post by Trongersoll on Apr 11, 2012 12:07:41 GMT -5
Be sure to turn her on to this board and some of the threads that deal with basic investing. Keep us posted. That is for the future. Right now I need to get her hooked on making money. She is a bit "reading" challenged and wouldn't have the patience for a board like this right now. She needs to mature a bit more to be interested in a place like this.
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beenherebefore
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Post by beenherebefore on Apr 11, 2012 17:01:50 GMT -5
Rent her some movies like Wall Street, Wall Street II and my personal favorite, Trading Places, explain to her what's going on, if she gets it, this may get her excited about her money making prospects. :-)
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Aman A.K.A. Ahamburger
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Post by Aman A.K.A. Ahamburger on Apr 14, 2012 12:14:11 GMT -5
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Aman A.K.A. Ahamburger
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Post by Aman A.K.A. Ahamburger on Apr 14, 2012 23:11:41 GMT -5
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bimetalaupt
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Post by bimetalaupt on Apr 15, 2012 23:05:35 GMT -5
Be sure to turn her on to this board and some of the threads that deal with basic investing. Keep us posted. That is for the future. Right now I need to get her hooked on making money. She is a bit "reading" challenged and wouldn't have the patience for a board like this right now. She needs to mature a bit more to be interested in a place like this. Trongersoll, Is your pick a bit conservative for a 40 year holding period???Esp with the Utility average having a negative correlation to interest rates on the T-30 bonds . djua to 30Y -0.35856801959312 djua to 10y -0.23096356348437
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Trongersoll
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Post by Trongersoll on Apr 17, 2012 12:16:14 GMT -5
Yes, My picks are pretty conservative. She really isn't interested in the mechanics of the market and my big fear is that she'll think that she lost some money at some point. I've exposed her to a few simple axioms like "The greater the gain, the greater the risk" and the Rule of 72, but nothing too deep. In Index Funds i'm looking at both price growth and dividend return. A Utility like FE has a reasonable dividends and price return and will, in my opinion, continue to exist in some form for the 40-50 year duration. Also, it gives me the arguement: Your Mom, and all your neighbors all send this company every month and will continue to do so forever, this investment is a way to get some of that money back. As for books, i have "I Will Teach You to be Rich" byt Ramit Sethi. www.amazon.com/gp/product/0761147489/ref=oh_o00_s00_i00_details This is a great introduction for young investors.
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thyme4change
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Post by thyme4change on Apr 17, 2012 12:19:52 GMT -5
I hope when my daughter is 19 she is not hanging out with a 59 year old man. And I'll be extra cautious if he has his fingerprints all over her money.
I'm kinda grossed out.
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Trongersoll
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Post by Trongersoll on Apr 17, 2012 12:37:08 GMT -5
I hope when my daughter is 19 she is not hanging out with a 59 year old man. And I'll be extra cautious if he has his fingerprints all over her money. I'm kinda grossed out. Heh, Hanging out isn't exactly the right term. We speak 3-4 times a week over the period of an hour while she is working. We have never spent time alone together and i will not let that happen. Your children hang out with adults everyday. They are called Teachers. Maybe if more Teens had Adult mentors the world might be a less violent place. As for finger prints all over her money. I don't know the login for her brokerage account nor the password. It has been my experience that those most willing to see bad in others, especially others that they don't know, do so because they know the bad in themselves. The traits we dislike most in others are often our own.
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rovo
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Post by rovo on Apr 17, 2012 15:58:15 GMT -5
I hope when my daughter is 19 she is not hanging out with a 59 year old man. And I'll be extra cautious if he has his fingerprints all over her money. I'm kinda grossed out. thyme, This is an investing board so leave the sarcasm on the E.E. board. rovo -- Moderator
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Trongersoll
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Post by Trongersoll on May 21, 2012 17:25:35 GMT -5
This week we openned her RothIRA. We went with a Roth because some day she may need the principle to fund buying a house. We are going to split her $100 a month 50/50 between her brokerage account and her IRA. We are going to split her initial funding of the Roth account ($1000) equally between SPY and VGK. I see VGK as a bargain right now when looked at as a 40 year investment.
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rovo
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Post by rovo on May 22, 2012 9:48:23 GMT -5
Maybe. Maybe not. I would stick with U.S. companies to avoid the ramifications of currencies and politics.
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bmephdinco
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Post by bmephdinco on May 25, 2012 10:50:55 GMT -5
I think this is great, I wish I'd had someone smart with money to help me when I was that age....I did what I could, but it was more "Real time" and not "Future time" stuff. I would show her some of the stats about starting a Roth at 19 and stopping at 29 is better than starting at 29 and going for 30 years (of course, hopefully she won't stop but still). And perhaps she'll pass this along to her peers - it's better than a $5 tip for sure!
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Trongersoll
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Post by Trongersoll on Jun 2, 2012 12:19:36 GMT -5
How did you know i tip her $5? heh, well, we've hit a bit of bump in the road. A couple of years ago she was cited for under age drinking. *sigh* kids... Well, her mom's car insurance company found out and dropped her, so now she has to pay her own car insurance which is as much per month as her car payment. Plus, it is summer and "girls just wanna have fun". I'm going to see if there is any amount that i can get her to save since something is better than nothing. It is hard to compete with the Jersey Shore.
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8 Bit WWBG
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Post by 8 Bit WWBG on Oct 3, 2012 14:59:05 GMT -5
...:::"So, Sept. 2011, we openned her a Schwab brokerage account with $1,100 in it.... We started with 52 shares of the ETF SDY (one of my favorites).":::...
This is about where I am, except Oct 2012, and, not $1,100. I'd love to hear an update to this story.
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Trongersoll
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Post by Trongersoll on Nov 16, 2012 17:06:10 GMT -5
Sadly, there isn't anymore to add. She started a new job and got a boyfriend so her time is all tied up. I haven't seen her since Aug. I suspect that her accounts are just sitting, slowly growing.
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formerwaitress
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Post by formerwaitress on Nov 24, 2012 23:33:27 GMT -5
This is great news, Trong! You've done a world of good for this young lady, and she will thank you some day. I started investing my babysitting money at 14 and am in my early 30s with investments worth well into the 6 figures. I'm also single, so it's not as if I have help from a husband in my efforts at saving. My parents encouraged me to save my babysitting money, but I didn't see the point. Once I saw all the stuff I was accumulating and realized I didn't want most of it, I decided it wouldn't be a bad idea to save some money for a rainy day. While in Algebra I class, my teacher showed us day after day how money can grow exponentially over time and that convinced me to save. Those early lessons in saving have prevented me from wasting a lot of money on clothes, partying, cars, etc. I've never had credit card debt and only have a small student loan. My credit is excellent too. While I make it a point to enjoy life with nice vacations and have wasted money on partying, I'm always most concerned about balance. I feel that if I pay myself first, the money that I "waste" is okay to an extent because I've already accumulated a good deal. Sometimes you just need to spend to have a good time with your friends. Please share my story with her when you next see her. It's very nice to be in my 30s with really no financial worries, especially since I have no one to support me.
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