DD 22 wants to know about investments..

[RobLJ]

It's impressive that she's interested at her age, and there are worse things than buying a dog of a stock (and who knows? I bought CMI 2.5 years ago, it promptly puked almost 50% and now it's up 44%, which shows that my timing sucks.)
The Berstein book for millenials looks really good, and he appears to start with a 3 index fund portfolio, which is a good starting point, IMO. I started off with a 6 fund Lazy Portfolio and branched off from that, but it worked great my first 7-10 years.
I also was influenced by Malkiel and learned a lot from Bernstein's 4 Pillars. I bet the Dummy's book is good as well, although I haven't looked at it.

[chris2008]

JLCollins has this great piece of advice which might serve your daughter, too:
How I failed my daughter and a simple path to wealth

[brucethebroker]

Quote:

Originally Posted by Maenad Jim Collins' book "The Simple Path to Wealth" is good too.

+1. I believe he wrote that for his young daughter.

[DrRoy]

Quote:

The books I found helpful are these: The Millionaire Teacher by Andrew Hallam How a Second Grader Beats Wall Street by Allan S. Roth These first two are the ones I absolutely recommend. I also have read these: Predictably Irrational by Dan Ariely – I found this very interesting! The Four Pillars of Investing by William J. Bernstein Why Smart People Make Big Money Mistakes by Gary Belsky & Thomas Gilovich Your Money & Your Brain by Jason Zweig The Investor’s Manifesto Preparing for Prosperity, Armageddon, and Everything in Between by William J. Bernstein A Random Walk Down Wall Street by Burton G. Malkiel

Great list. A personal favorite is Your Money & Your Brain.

[Milton]

Quote:

Originally Posted by RobbieB I suggest she buy a hundred shares. Maybe she'll make some dough. Maybe she'll lose $600. Either way she'll learn for herself and that's what you really want eh? I lost 25 grand playing "penny stocks" and at age 35. Better to lose six hundred at 22.

I agree. Resist the urge to make her decisions for her.

Sometimes experience is the best teacher, and this is often the case with investing. Allowing her to realize on her own that many mutual funds charge hefty fees will make the case for ETFs better than any advice you may dispense.

[donheff]

Quote:

Originally Posted by jimbee I recommend "If You Can" by Bill Bernstein. There is discussion of the book in this thread. https://www.bogleheads.org/forum/viewtopic.php?t=136528

Quote:

Originally Posted by VinTek I heartily second this recommendation. In fact, Bill Bernstein makes this book available to download for free in Acrobat, mobi, and Kindle formats at his website, Efficient Frontier. Go to this link for get it.

Sounded interesting so I clicked the link and realized that I had seen that book cover. That's because I already have it and probably gave it to my kids. Maybe I should move this post over to the "what have you forgotten recently" thread.

[rayinpenn]

Just ordered the millionaire teacher and how a second grader beat Wall Street - they will be under the tree... I also forwarded some of your suggestions...

thanks to all...

[steady saver]

I gave this to my nephew last year. Turns out the author had been his teacher at the American School in Singapore. My nephew loved the book and got interested in investing.
Highly recommended.

[kcowan]

Quote:

Originally Posted by rayinpenn I’ve explained my philosophy on low cost highly diversified etfs and mutual funds to her but it hasn’t been easy. Last night she comes to me with a stock paying nearly 10% dividends. I ask a couple of questions 1. It has been around 3 years. 2. It had a high of $10 and now is at $6 I said with all the boats in the harbor so high doesn’t it concern you that it has lost 40%? The discussion deteriorates like kinda like teaching a teenager to drive. She’s crying of course and I am a bad person for asking tuff questions. “I’m just learning”.

I would say to her: "Let's investigate this stock as an investment!" like why has the stock dropped? That might explain the 10% yield. What is the likelihood that the stock will rise or the dividend will fall?
etc.

She has already expressed an interest. Giving her a reading list is unlikely to bear fruit. Carpe Diem!

[sengsational]

Quote:

Originally Posted by kcowan Giving her a reading list is unlikely to bear fruit. Carpe Diem!

I've read a few of those and most of those concepts are not going to be of much interest to a 22 year old. As you say, seize the day with what interests her at the moment. Don't miss out on the "teachable moment" with a tomb on planning your retirement, for goodness sake.

[athena53]

A couple more thoughts: if she likes podcasts, I recommend Jim Cramer's "Mad Money", especially the beginning of each chow where he either comments on what the market is doing or gets into specifics of some factors to look for in stock-picking. One caveat: ALL the CEOs he interviews talk a good game but the stocks don't always turn out to be winners. One (Theranos) got nailed for falsifying records. He does a good job covering the basics, though.


Also - could you re-open the dialogue by asking her what upset her about your previous discussion and what type of input she needs from you? I'm assuming your concerns about the stock she wanted to buy were said in a neutral tone of voice (and I would have had the same concerns about it).

[Milton]

Quote:

Originally Posted by athena53 I recommend Jim Cramer's "Mad Money"

Unless his daughter isn't really interested in education and instead merely craves hyperbolic entertainment, it's difficult to imagine she would get much of value out of this.

[athena53]

Quote:

Originally Posted by Milton Unless his daughter isn't really interested in education and instead merely craves hyperbolic entertainment, it's difficult to imagine she would get much of value out of this.

As I said, I like his "macro' views on the market. I also like his explanations of P/E ratios, how to adjust them for growth, advantages of dividend-paying stocks, benefits of stocks vs. ETFs, etc. When people call in asking about a particular stock, you can see what he looks at in deciding whether to tell them to buy, sell or hold. Good basic stuff. And yes, he's a bit flamboyant but RayInPenn's daughter may find him more interesting than his more staid colleagues.

[racy]

The female mind works differently than the male mind. She wasn't asking for advice, she wanted confirmation. She's not going to read any books you give her! I agree with RobbieB: save the book money and put it towards buying her stock. Let her learn from her own experience.

[Maenad]

Yeah, cuz a 22YO young man will come to dad for investing advice rather than bragging about his "hot stock".

[street]

Quote:

Originally Posted by RobbieB I suggest she buy a hundred shares. Maybe she'll make some dough. Maybe she'll lose $600. Either way she'll learn for herself and that's what you really want eh? I lost 25 grand playing "penny stocks" and at age 35. Better to lose six hundred at 22.

Excellent idea! Hands on and ownership will teach her more then any book could do.

[kcowan]

Quote:

Originally Posted by athena53 A couple more thoughts: if she likes podcasts, I recommend Jim Cramer's "Mad Money"... He does a good job covering the basics, though...

Although he covers the basics, his hit rate is 47% winners. Might be a bad start. Maybe tell DD to flip a coin as a better choice.

[Scuba]

Great suggestions in this thread. My 27 YO niece asked me to help her with some basic advice. She wants to learn more about how to decide between paying off her 6% student loan debt, saving more in her 401K, and saving for a home purchase. She also has questions about Roth vs tIRA's. I don't want to overwhelm her with too much material, and would like to make sure the books I'm recommending cover not only how to invest, but a more complete picture that answers some of her other questions. Thinking of:
- The Millionaire Teacher
- Simple Path to Wealth
- If You Can
- Why Didn't They Teach me this in School? by Cary Siegel

If I want to recommend between 2-5 books to help her start to get some basic personal money management and investing knowledge, what do you think about these four? She is a healthcare professional, has a PhD in Physical Therapy, so she's no dummy but not into business or finance. Thanks!

[RenoJay]

This is a great “natural consequences” teaching opportunity. Let her put a small sum into her stock pick and see how it does, and perhaps put a similar small sum into a diversified ETF. Agree that in five years you’ll determine the winner.

[OldShooter]

Quote:

Originally Posted by Scuba ... what do you think about these four? ... Thanks!

I don't know them except "If You Can." That is only fifteen pages and includes some book recommendations, so I think it is the logical place to start.

I strongly disagree with those suggesting that she pick a stock, buy it, and track it. That teaches seriously bad concepts: (1) Not having a diversified portfolio, (2) watching her portfolio too closely, and (3) that buying individual stocks is a good idea for individual investors.

I would encourage her instead to go with a portfolio along the lines of Bernstein's suggestions in "If You Can," possibly adjusted by a little paternal wisdom.

Harry Markowitz's advice: https://youtu.be/TbMjIn1p-i0