Thanks for all your feedback on kids and money. Here was one of the stories I enjoyed most:
Henry Scheck: ‘When I was 16 or so, my Aunt died, and my father decided that some part of the very small inheritance should go to my brother and me. So he said, there’s a $1000 for each of you(this was once a nice sum for a 16 year old) to do with as you wish. But he also gave us some ideas on what to do with it. My first thoughts, of course were: cool, I can get a car or maybe anew stereo with really big speakers (you’ll recall that there was a time when the cachet of any pair of speakers was proportional to their size, instead of the inversely proportional relationship that exists today).
‘As it turns out, my brother and I listened to my father’s alternatives: one of which was investing the $1000 in the stock market. This is exactly what we did — electing to buy 20 shares each of the company that ran the place we spent a lot of time in after school almost each day: McDonald’s. It turns out I was ‘investing in things I knew very well’ years before I’d ever heard of Peter Lynch.
‘I left the money in McDonald’s and watched through high school and college as it split and split again and again, the 20 shares eventually growing to 200 shares. I sold the stock when I was ready to make the down payment on my first house — my dad and McDonald’s had made it possible for me to buy my first home, years before it would have otherwise been possible.
‘This simple act by my dad started me on a lifelong interest in saving my money and investing it. Which is a pretty neat legacy.’
Amazingly, here was the very next e-mail after Henry’s:
Laura Schultz: ‘My 14-year-old son’s favorite restaurant was always and continues to be McDonald’s. By starting with one share of McDonald’s when Kevin was seven and adding small amounts over the years, he has amassed a sizable position in the company. He reads the annual report when it arrives and always checks on his investment when he visits our local McDonald’s. Unlike a toy that is forgotten after the holidays, this knowledge will last for a lifetime.’
Meanwhile, you want inspiration? Try this one:
Anonymous: ‘I’d like this not to be published, or at least not attributed, but fortunately for my son,I’m a saver by temperament and my wife and I have given him $20,000 annually since his birth. Soon, he will get a VERY pleasant surprise ($20,000 per year for 18 years having netted 15% – I know you’re a math whiz). Not understanding this well when I was young, I was far too casual about aggressively funding my retirement plan, and today it’s not nearly the size it could be. Obviously none of my bosses understood it either, since nobody bothered me about it. Today, I would not have an employee who wasn’t FULLY encouraged to participate in savings plans. Fortunately, I have amassed enough outside my retirement plan to suffice, but I could have done better in all areas if only I had understood.’
If you’re wondering about the math, the teenager’s got $1.5 million coming to him. Of course, the last 18 years were almost perfect for investment success – 15% after tax will not be nearly so easy to achieve in the next 18. But rain or shine, you can’t beat a program of steady saving and investing – started early.