Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Investing advice for 13 year old?
Old 12-05-2020, 12:38 PM   #1
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: No Country for Old Men
Posts: 47,524
Investing advice for 13 year old?

My 13 year old grandson just sent me this text message:

Quote:
I heard some of my friends talking about stocks, and I kind of understand how it works. Is it possible for me to start investing? I have about $900 in savings.
I'd love to hear how you folks would respond. Age appropriate reading suggestions?

So far my only response has been "We need to talk."
__________________
Numbers is hard

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 12-05-2020, 12:45 PM   #2
Thinks s/he gets paid by the post
 
Join Date: Apr 2015
Posts: 2,029
What a wonderful text and conversation to have with your grandson!

No suggestions on reading material, however if it gets to the point of "real life" investing,
perhaps a small amount in a kids stock, such as Disney, might be fun to watch, along with the usual fund choices.

Grandpa, you've done a great job teaching!
__________________
*Give me a fish, I will eat for a day. Teach me to fish, I will eat for a lifetime.
*Every Pearl is the result of an oysters victory over an irritation.
pacergal is offline   Reply With Quote
Old 12-05-2020, 12:48 PM   #3
Moderator
Aerides's Avatar
 
Join Date: Nov 2015
Posts: 7,158
I'd probably get a little more out of him first. His friends could have been talking about high riding crazy stocks (that rare penny one that goes bonkers) or bitcoin, and mixing terms.

Probably a good place to start would be to bring him to reality and quickly supplement and correct whatever other 13 year olds think. Also, tell him not to tell his friends about his $900!
Aerides is offline   Reply With Quote
Old 12-05-2020, 01:04 PM   #4
Moderator
braumeister's Avatar
 
Join Date: Feb 2010
Location: Flyover country
Posts: 17,156
Since he's family, I assume you'll offer him a favorable AUM fee to manage it for him?

Let's see, at 1% that would net you about 75˘ a month...
__________________
I thought growing old would take longer.
braumeister is online now   Reply With Quote
Old 12-05-2020, 01:08 PM   #5
Recycles dryer sheets
HawaiiShrimp's Avatar
 
Join Date: Nov 2020
Location: So Cal
Posts: 75
Hi REWahoo,

I highly, highly recommend 2 books that I read firsthand that changed my life for good.

1. Millionaire Next Door (Thomas Stanley)
2. One Up On Wall Street (Peter Lynch)

If your teen is not into reading, then listen to Audiobook. It's equally good. Make sure to take notes also.

After that, open a custodial account with his/her parent and start researching companies. Not stocks, COMPANIES. Understand how companies work, how they make money, how they spend money, and their products & services. At this stage, it's very important to focus on building a strong knowledge foundation so that he/she can stand tall when the weather gets rough.

I used to coach college kids' financial seminars at my church. I was surprised by how uninformed they are when it comes to personal finance and investing. Almost all of them: "Zero experience", "Never heard of it", "Retirement stuff is way too far out" etc...

Our schools are really lost their touch when it comes to preparing the kids for the real world...


Last but not least:
"Give a man a fish and he will eat for a day. Teach a man how to fish and you feed him for a lifetime."

Best regards,

Shrimp
HawaiiShrimp is offline   Reply With Quote
Old 12-05-2020, 01:19 PM   #6
Thinks s/he gets paid by the post
 
Join Date: Feb 2007
Location: Upstate
Posts: 1,645
Quote:
Originally Posted by HawaiiShrimp View Post
Hi REWahoo,

I highly, highly recommend 2 books that I read firsthand that changed my life for good.

1. Millionaire Next Door (Thomas Stanley)
2. One Up On Wall Street (Peter Lynch)

If your teen is not into reading, then listen to Audiobook. It's equally good. Make sure to take notes also.

After that, open a custodial account with his/her parent and start researching companies. Not stocks, COMPANIES. Understand how companies work, how they make money, how they spend money, and their products & services. At this stage, it's very important to focus on building a strong knowledge foundation so that he/she can stand tall when the weather gets rough.

I used to coach college kids' financial seminars at my church. I was surprised by how uninformed they are when it comes to personal finance and investing. Almost all of them: "Zero experience", "Never heard of it", "Retirement stuff is way too far out" etc...

Our schools are really lost their touch when it comes to preparing the kids for the real world...


Best regards,

Shrimp
This!

(Looking over my shoulder for OLDSHOOTER to chime in) I think it is a great idea for him to want to own a companies stock. For my child, he was into Skylanders so we bought some Activision (ACTI) back when it was $15/share. That is, buy something that they can recognize through their business.

OTOH when college students ask me about investing (we sometimes look at what the market is doing before class starts), I suggest (in addition to learning about how companies function):
1) First order of business is savings of 3-6 months expenses (rainy day fun)
2) After 1 is complete, start investing every pay period in low cost broadly based ETF's (or mutual funds). If you are working for someone who does matching funds, do this at least to the match point.
3) After doing 2, pick one company and buy a bit of their stock. Follow it every day. Read the earnings reports, and listen to the conference calls. Write down what you think might be good and bad things for their industry in the next 10, 20 years.
4)If you get a raise/promotion, use that as an opportunity to increase your savings instead of buying more stuff. The only exception for this is to save money towards a home purchase.
copyright1997reloaded is online now   Reply With Quote
Old 12-05-2020, 01:27 PM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Car-Guy's Avatar
 
Join Date: Aug 2013
Location: Citizen of Texas
Posts: 5,291
Great question to be asked by someone so young... I'm sure you'll give him good guidance...
__________________
A goal without a plan is really just a wish
Car-Guy is offline   Reply With Quote
Old 12-05-2020, 02:36 PM   #8
Thinks s/he gets paid by the post
38Chevy454's Avatar
 
Join Date: Sep 2013
Location: Cincinnati, OH
Posts: 2,768
Good for your grandson to even be interested and asking about it. Most 13 year olds would be spending the money as it was burning a hole in their pocket. I would suggest open a Roth IRA, and invest in some individual company stocks that he has interest and familiarity with. With his age and being all after tax money already, the value of Roth is incredible opportunity. The power of compounding can be a great lesson here. He can watch the dividends get paid in, and watch as the news and success of the company has an effect on the stock price.
__________________
The advice we're giving you is invaluable, that's why it's free
Experience is a good teacher, but the tuition can get expensive real fast

Semi-Retired 7/1/16: working part-time (60%) for now [4/24/17 changed to 80%]
Retired Aug 2, 2017; age 53
38Chevy454 is offline   Reply With Quote
Old 12-05-2020, 02:53 PM   #9
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
travelover's Avatar
 
Join Date: Mar 2007
Posts: 12,833
I think the Vanguard Star fund has a low, $1000 minimum.
travelover is offline   Reply With Quote
Old 12-05-2020, 03:02 PM   #10
Recycles dryer sheets
 
Join Date: Mar 2017
Posts: 250
The main thing I would try to convey to him is the miracle of compounding. Put all of your money in either the S&P or Total Market index fund, reinvest the dividends, and keep adding to it. By the time he is 45, he will be reading up on how to ER.


I did well, but I think I would have done better if I had done this.
__________________
Always act as if nothing has happened, no matter what has happened...
BoodaGazelle is online now   Reply With Quote
Old 12-05-2020, 03:07 PM   #11
Thinks s/he gets paid by the post
MuirWannabe's Avatar
 
Join Date: Oct 2009
Posts: 1,479
I’d love to get such a question from my 25 yo son. Much less my grandson. Congratulations on that.

I’m certain whatever advice grandpa offers will be sprinkled with wisdom and humor.
__________________
“Of all the paths you take in life, make sure a few of them are dirt.” John Muir
MuirWannabe is online now   Reply With Quote
Old 12-05-2020, 04:25 PM   #12
Recycles dryer sheets
 
Join Date: Jul 2018
Location: Wy'east
Posts: 59
Yes on most of the above...

Build a safe and stable base (although at 13 the kid doesn't have the worries of a leaky roof).

Teach and beat
(gently) into their head the power of compounding interest.

You have a special kid there, I'm sure that you will do him well.
Alectoris is offline   Reply With Quote
Old 12-05-2020, 04:34 PM   #13
Thinks s/he gets paid by the post
 
Join Date: Nov 2015
Posts: 2,062
I had similar talk with my daughter when she was younger. I kept it simple. Invest in S&P index fund, explained why and what it was. Explained it can go down but stay invested, then also showed that over time it continues to go up. Only time I expect it to collapse is if the country collapses and well we have lots of other issues to worry about. Then showed comparison of invested in S&P index over time and what $ in savings would be worth over same time, out to retirement. Also explained to steer clear of investing in individual stocks until they understood how to value and invest. Ignore the get rich claims by those who held stocks like Tesla, that does happen, but there are also companies that fail, point out Sears, Hertz and even GM. All reputable companies that still stuck it to their shareholders. Diversification of S&P protects against loosing it all.

Also explained value to investing even small amount every month and let it grow.

Good luck.
bobandsherry is offline   Reply With Quote
Old 12-05-2020, 05:00 PM   #14
Thinks s/he gets paid by the post
 
Join Date: Oct 2019
Posts: 1,062
I'd have him take 1/2 of whatever he is going to invest and buy a Total Stock Market fund and then split the other half among 5 or 6 stocks.
Teach him how to calculate percentage returns over time.
Maybe he will learn to just put his money into low cost mutual funds and not try to pick stocks. But, maybe not, he might think he is a great stock picker.
Time2 is online now   Reply With Quote
Old 12-05-2020, 05:14 PM   #15
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Brat's Avatar
 
Join Date: Feb 2004
Location: Portland, Oregon
Posts: 6,814
I audited a math class at Portland State. The professor commented to me how little students know about credit cards and IRAs. I told her she can talk about credit cards and I would talk about IRAs.

I have just started to talk to my Portland grandchildren about investments, son brought out the game "Stocks and Bonds". The grandkids are 11 and 12, I found that the concepts were hard for them so I think I will try again in 6 months. Before there were 529s I had accounts for my children's college expenses. When they were about 13 I showed them the accounts, gave them a list of investment options and asked how they would like each of theirs invested. Son went 100% Magellan, daughter 50% Magellan + 50% savings bonds. Their careers reflect their risk tolerances.

Have the parents set up an account for them at Fidelity. I suggest you pick a couple of strong businesses and discuss them as possible investments, let him choose.
__________________
Duck bjorn.
Brat is offline   Reply With Quote
Old 12-05-2020, 05:14 PM   #16
Thinks s/he gets paid by the post
street's Avatar
 
Join Date: Nov 2016
Posts: 3,860
^ this right here. 100% equities is what I would advise my own grandson is this scenario. He could learn a lot and with a mentor he could see the ups and downs and how things work.
This would be a fun journey for him and you.
street is online now   Reply With Quote
Old 12-05-2020, 05:22 PM   #17
Full time employment: Posting here.
 
Join Date: May 2013
Posts: 579
Last week my friend asked for investing advice for her 16 year old to invest $1,500 in “something like Tesla.” Somehow with all these newbies coming out, it’s feeling like the proverbial shoeshine boy giving stock tips.

In any case, the email I sent the lad first discussed length of time of investment and showed with graphs and charts how he could create a small fortune if he put it into a Roth IRA and forgot about it til retirement.

The next part of the email showed the amazing rise of stocks like Cisco, Intel and Amazon in the late 90’s, compared them to the hot stocks of today, and then showed the viscous aftermath from 2000 - 2002.

The last part talked about diversification of index ETFs including beaten down sectors like international, commodities, etc. and also suggested that he bet a few hundred bucks on his hot stock ideas so he could witness firsthand whether he has the rare ability to pick skyrocketing winners that sustain over time.
__________________
Saved 8 figures by my mid-40's as a professional bubble-spotter. Beware...the Fed creates bubble after bubble after bubble.
RenoJay is offline   Reply With Quote
Old 12-05-2020, 05:31 PM   #18
Full time employment: Posting here.
 
Join Date: Jan 2014
Location: Everett
Posts: 956
If I had a young relative who was looking for advice on investing, I'd help with that and also throw something into the kitty as a reward for showing such foresight.
O2Bfree is online now   Reply With Quote
Old 12-05-2020, 05:46 PM   #19
Thinks s/he gets paid by the post
 
Join Date: Jul 2004
Posts: 1,463
Bernstein's paper If You Can. http://bookslibland.net/william-j-bernstein-if-you-can-how-millennials-can-get-rich-slowly-pdf/ (searched on "bernstein if you can" and got lots of hits...pick one for free pdf download)

I've heard Robin Hood brokerage has hooked a lot of youngsters...makes trading like a video game/UI design...too much trading erodes value of portfolio, so if Robin Hood is part of his understanding, maybe a talk about having most money in boring brokerage but perhaps a small percentage in Fun -if Robin Hood... depends on person's discipline...

And if he starts at this age and is consistent, wow. I was just looking at comparison of $100 in 1928 invested in S&P, bonds, US Treasuries and AAA Corporate Bond...S&P won by a humongous long shot 🙂

🎄
deserat is offline   Reply With Quote
Old 12-05-2020, 06:25 PM   #20
Recycles dryer sheets
bolt's Avatar
 
Join Date: Jun 2008
Posts: 329
STAR Fund.....1k min. in an Roth IRA.
Then suggest some indexing/sector funds literature. Theres much out there. Go look at Taylors reading list @BHeads.
I agree w/OB2free's post.

Good luck & Best wishes.....

I met a married couple in their late 20s/ early 30s yesterday that did not even recognize debits/credits. It is truely sad.
__________________
It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.
bolt is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Advice for Investing for 86 year old Live Free FIRE and Money 38 11-27-2018 02:00 PM
24 year old feeling like a 44 year old wanting a 64 year old portfolio Stripes Hi, I am... 9 08-30-2018 05:28 PM
39 year old doing retirement analysis for 70 year old parents grayparrot Hi, I am... 21 01-07-2012 11:14 PM
10-Year Old Releases Demon of 55-Year Old Opera Singer calmloki Other topics 9 08-12-2010 11:09 AM
44 year old woman takes advantage of 13 year old boy Dawg52 Other topics 37 05-24-2006 11:15 PM

» Quick Links

 
All times are GMT -6. The time now is 01:46 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2021, vBulletin Solutions, Inc.