First Step: Learning to Invest & Teaching your kids

My fist step in investing was when I bought two shares of delta stock and one share of Lockheed Martin the commission was $15 per trade so the total commission for three shares of stock came to $30. I didn’t have much money so I bought what I thought I could afford. I didn’t realize at the time you could invest in mutual funds for as little as $50 a month. I had no idea what I was doing, and looking back on it, it shows. I’ve learned a lot since, but do not consider my “three share folly” a waste or time or money by any means. It gave me a valuable education and I have even managed to turn a profit. I’ve done some great things with the delta stock, so even though my two shares are now worth six dollars less then when I bought them, I am currently up $1.94. My one share of Lockheed Martin has a profit of $29.61 which means I could sell today, and even with the $15 commission fee I’ll still be money ahead. Not to mention the $.30 dividends I’ve been receiving every quarter from that one share. Who knows, if I save my money and buy bulk shares the profit will increases even faster. Then I can sell for an even higher profit but for right now my money is going towards more lucrative investments. (If actively buying and selling stocks interests you I would strongly suggest opening up a brokerage account with USAA if you are eligible for membership. Their rates are some of the best I’ve found.)
I call the experience mention above First Step A. My true first step to accumulating wealth efficiently actually started with Fist Step B. This was a very simple first step and it came when I admitted to myself that I knew nothing of investing. I didn’t know where to go. I didn’t know anyone that was wealthy, or if I did I wasn’t aware that they were wealth. I was married, a student and having trouble making ends meet (I still am but I have security knowing I have access to an emergency fund) so I decided to look towards the “Dummies” series of books. This was one of the best things I ever did. The book was called Personal finance for Dummies by Eric Tyson. It set me back about $20. $20 I probably had to put on a credit card. Setting the interest of the credit card aside and looking at this book as an investment it has made me over $3,000. That equates to almost a %1500 return in two years. Being realistic that return needs to be split between two other books, George S. Clawson The Richest Man in Babylon (on CD), and Richard Paul Evans The five Lessons a Millionaire taught me.
Having the chance to do it all over again I would skip First Step A and change a few things about First Step B. If you are just getting started with investing here is what I would recommend; Buy all three books, make sure to by them used, except maybe Dummies as it would be worth the money to have the current edition, and I would get Clawson’s book and CD. I would begin by reading Evan’s book first. It’s a fast read and can really get you motivated. Concurrently I’d be listening to Clawson book during any commuting I might have, and then finish up with the Dummies. I would caveat this plan by suggesting that you start saving when you are motivate according to the ideas present by Clawson and Evans but wouldn’t begin investing until you’ve finished the Dummies book.
This last bit of advice if for all the parents that might be reading this, PAY YOU CHILDREN IN GOLD or Silver (probley start with the silver as gold is very expensive)!!!!!!! You might wonder about this, and while I don’t have kids, my wife can attest that I still act like one. Think about it for a second, when you were around the age of 5 if you had received a silver coin, what are the chances you still have that silver coin today? If you still had that coin you would likely have earned higher than a 5% return times the number or years past. Again imagine that you are five but instead of a silver coin you had received a $20 bill (roughly the price of some silver coins). Now what are the chances you’d still have the $20? If by some miracle you did, remember what inflation has done for you, and what buying power that 20 now has. I believe that one of the worst disservices of our time is that we teach our children to get rid of money. That money is evil; we should stay away from it. How many times will your children hear the phrase that money is evil before they are 16 (the age at which most people begin to work and earn a “meaningful” income)? As toddlers and adolescents how many time will they curiously explore money with there five sense and be told, “don’t do that you don’t know where it’s been.” “That’s dirty you might get sick.” “Give that to me it’s full of germs.” Don’t get me wrong I’m not saying that we should make children pack coins in their mouths, but there exist alternatives. Silver and gold coins provide one alternative.
I can already hear people screaming and see the email flooding my inbox “WHAT!!!!! GOLD???? Mutual funds have a much better return!!!” “I’m going to get my kid a savings bond. That way he’ll be forced to save it.” Both of these arguments are true, but who cares. Being the great parents that you are you’ve already got a mutual fund set up for your child’s college expensive (of course you don’t have it in their name, one of YOUR mutual funds is dedicated for such a purpose, if you want to know why you’ll have to email me) and as far as the Savings bonds go, I recommend that grandma and grandpa do that. How much learning really goes on when you are forced to do something? The important thing here is that the youth learns something. First and most importantly they will learn how to save. Period. Any save by choice. Second they will learn that money is tangible. (Granted the tangibility of money is open for debate but I’ll save that for a later blog.) What child wouldn’t love to have their very own gold and silver treasure? The fact that gold and silver must be exchanged before it can be used will give the child incentive to hang on to it. They still have the choice of spending but are less likely because they will have something they understand is even more valuable than candy or toys. You can even make it game to help your children cumulate more by exchanged their silver coins for gold coins.

The fact that elementary schools don’t teach an understanding of money to children is a great disservice; however I blame parents for the situation of our society. I accept that the society we live in is great, however I believe it could be much much better if everyone had a basic understanding for money.

If you have any question please feel free to email me at xn2flyfishing@gmail.com. Currently I am researching investments in Gold and Silver and will keep you posted on such. Soon I will Bloging on a plan for getting out of debt