Investing for children, Pt. 1

In IFO’s opinion, children should learn about investing their own money from  relatives’ gifts to earnings as babysitters, paper carriers, or burger flippers –  as soon as their parents deem them mature enough to understand how to build wealth.

When IFO was a girl, her visiting uncles would give her 50 cent pieces, which she carefully saved. Now that we review that period as an adult, we realize it was less an admirable, prudent virtue than it was that banks and stores were inaccessible, so she couldn’t blow the loot or put it in a bank.

However, when she started to babysit, she asked her father what to do with her earnings. Even as a financially naive 14-year old, she realized his attitude wasn’t aligned with hers. He did recommend, correctly, that she put the money in a savings account. But then he went on to discuss his philosophy on wealth.

Essentially, he had devised a system to keep himself from making Irish-style mistakes.  He took out loans instead of getting money from his savings account. “That way,” he explained, “I only pay about 2% interest on the money, rather than the 6% the loan costs, because my savings account returns 4%.” Huh???

But we understand. It was based on his experience with the Great Depression and WW II. Just about his entire life had been lived in poverty.  Then, he learned about investing in the stock market. In 1957 or so, he fell for the sweet talk of a sweet young thing at Merrill Lynch and bought Ford stock (NYSE:F) at its all time high price. Later, he caught on to the fallacy of believing brokers. His opinion was that they moved stocks that were going to go down from their HNW clients to the low net worth ones.

Now, thank goodness, we have the Internet plus discount brokers who WILL NOT give you any advice, and you can come to places like Investing for One to get a fix on how to go about building your own wealth. We hope you like our approach: we talk about the economy, lifestyles, general markets, and investing psychology.

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About InvestingforOne

I've been investing in various assets by myself using a discount broker for many years. Over that time, I've developed some theories that others might find useful. Plus, there is more to investing than money. Time, talent, work, friends, family all go into developing a good and satisfactory strategy.
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