Hey, I read a LOT last week. "Young Dreamers" is the place for this one.
David Owen has become one of my favorite authors. I stumbled across his biography of Chester Carlson (inventor of the office copying machine) and dug up several of Owen's other books. "Bank of Dad" is the best kid's money book I've read since "If You Made A Million".
He uses his own kids as guinea pigs but they're developing financial powers of reasoning far beyond most young adults. His theme is that parents ask kids to do incredibly stupid things with their money ("Look, Junior, if you give your money to this 'bank' for 10 years, it'll earn 20 cents of 'interest'!"), and the kids see right through it. An eight-year-old has no appreciation of saving for college. In fact most kids spend their money as quickly as possible in order to enjoy it before their parents take it away from them (one way or another) to do "responsible" things to it.
Owen sets up his own home bank that pays (*gasp*) FIVE percent PER MONTH. Of course the kids quickly grasp the power of compound interest and become savers.
But he's also learning as well as teaching. He let his kids sink all their allowance money into Beanie Babies because he knew that they'd learn a lot when the collectibles market collapsed. (They weren't listening to him anyway.) "Unfortunately" for Owen's smugness, his son discovered eBay and sold two of 'em for $120. The market subsequently collapsed but the good news is that both kids are now very careful in choosing their new toys and caring for them, realizing that when they're tired of them they can resell them for 50-90% of their value. Some of their Disney videos are actually returning more profits than Disney's stock.
We already do the Bank of Dad (with CDs & 401(k)s) and our kid loves having her own checking account, but I've been casting about for a way to get her more interested in investing. She's made some money on stocks but she says that she's bored with stockpicking. (No testosterone poisoning there.) I figured that her $500 stash of years of birthday/holiday gifts would be burning a hole in her pocket, but she's reluctant to sink her money into index funds because she might lose too much for her risk profile. (She's learned a lot from watching me short KMart.)
Owen's solution to our problem is "Dad's Stock Exchange". He essentially gives his kids $250 as a portfolio of a half-dozen of their favorite stocks (McDonalds, AOL, etc). The kids are free to keep the portfolio, to sell it for other stocks, to put it into mutual funds or bonds, to put it back into the Bank of Dad (hey, 5%/month is a great deal), or even to spend it on toys. The key is that each stock is priced at 1/100th of its actual share price and, to keep things simple, there are no commissions or taxes. So the kids feel free to experiment with diversification & risk management. His son promptly started tinkering with techs. His daughter actually said that she was too busy with schoolwork to monitor her investments, so she moved into index funds.
Owen also wrote a hilarious book on home improvement called "The Walls Around Us." He's actually quite educational about paint, siding, landscaping, roofing, etc while describing his power-tool mishaps.
Jarhead, Owen is apparently an enthusiastic golfer. I'd recommend his thoughts on Tiger Woods in "The Chosen One"-- Owen claims that Woods has simultaneously destroyed & revived the game, while electric golf carts are about to destroy it again within another generation. You'd appreciate Owen's appraisal of what Woods is forcing the rest of the pros to go through, off the course as well as on it.
David Owen has become one of my favorite authors. I stumbled across his biography of Chester Carlson (inventor of the office copying machine) and dug up several of Owen's other books. "Bank of Dad" is the best kid's money book I've read since "If You Made A Million".
He uses his own kids as guinea pigs but they're developing financial powers of reasoning far beyond most young adults. His theme is that parents ask kids to do incredibly stupid things with their money ("Look, Junior, if you give your money to this 'bank' for 10 years, it'll earn 20 cents of 'interest'!"), and the kids see right through it. An eight-year-old has no appreciation of saving for college. In fact most kids spend their money as quickly as possible in order to enjoy it before their parents take it away from them (one way or another) to do "responsible" things to it.
Owen sets up his own home bank that pays (*gasp*) FIVE percent PER MONTH. Of course the kids quickly grasp the power of compound interest and become savers.
But he's also learning as well as teaching. He let his kids sink all their allowance money into Beanie Babies because he knew that they'd learn a lot when the collectibles market collapsed. (They weren't listening to him anyway.) "Unfortunately" for Owen's smugness, his son discovered eBay and sold two of 'em for $120. The market subsequently collapsed but the good news is that both kids are now very careful in choosing their new toys and caring for them, realizing that when they're tired of them they can resell them for 50-90% of their value. Some of their Disney videos are actually returning more profits than Disney's stock.
We already do the Bank of Dad (with CDs & 401(k)s) and our kid loves having her own checking account, but I've been casting about for a way to get her more interested in investing. She's made some money on stocks but she says that she's bored with stockpicking. (No testosterone poisoning there.) I figured that her $500 stash of years of birthday/holiday gifts would be burning a hole in her pocket, but she's reluctant to sink her money into index funds because she might lose too much for her risk profile. (She's learned a lot from watching me short KMart.)
Owen's solution to our problem is "Dad's Stock Exchange". He essentially gives his kids $250 as a portfolio of a half-dozen of their favorite stocks (McDonalds, AOL, etc). The kids are free to keep the portfolio, to sell it for other stocks, to put it into mutual funds or bonds, to put it back into the Bank of Dad (hey, 5%/month is a great deal), or even to spend it on toys. The key is that each stock is priced at 1/100th of its actual share price and, to keep things simple, there are no commissions or taxes. So the kids feel free to experiment with diversification & risk management. His son promptly started tinkering with techs. His daughter actually said that she was too busy with schoolwork to monitor her investments, so she moved into index funds.
Owen also wrote a hilarious book on home improvement called "The Walls Around Us." He's actually quite educational about paint, siding, landscaping, roofing, etc while describing his power-tool mishaps.
Jarhead, Owen is apparently an enthusiastic golfer. I'd recommend his thoughts on Tiger Woods in "The Chosen One"-- Owen claims that Woods has simultaneously destroyed & revived the game, while electric golf carts are about to destroy it again within another generation. You'd appreciate Owen's appraisal of what Woods is forcing the rest of the pros to go through, off the course as well as on it.
