Our Thoughts On Kids and Investing

Jeff’s Random Words

Hopefully, you’ve had a chance to listen to both of our episodes with Robert Brokamp on kids and investing. “Bro”, as he’s known, is a wealth of knowledge but is also a parent. I found the balance between knowledge about investing and the realities of parenting to be a fun aspect of these two conversations. You can have all the “right answers” when it comes to investing and personal fiance, but if your kids don’t want to listen to you, what good is it?

To say I became obsessed with investing in early 2020 is probably an understatement. For about a solid year it was what I thought about almost every free moment I had. During that time I also felt the need to talk to my family about everything I was thinking. This led to my entire family having no interest in investing. Lesson learned, don’t come on too fast just because you’re excited.

There’s a chance someone reading this is in a similar situation. You might really love this stuff, and you may be the only one in your house who feels that way. Take it from me, that’s ok! However, we all should want our kids to develop good personal finance and investing habits, so I’ve been giving some thought to how best to educate kids without turning them off entirely. 

We’ve talked about having goals before. In previous podcast episodes and newsletter posts, Jason and I have shared our belief that having a goal for your investing is much more important than having a 10-bagger or “beating the market”. My goal is to have enough money to retire comfortably. That’s really what matters. Anything beyond that is icing on the cake.

For kids, I think it’s getting them to understand the “why” of investing. My kids remember when their grandparents retired. They understand that their grandparents worked for a long time, but then were able to stop working and do other things. They also understand work is where we get money. So explaining to my kids that you need money to live on after you stop working makes sense to them. So that’s the “why” of investing. 

I didn’t get into portfolio allocation, valuation, index funds, or anything like that. I simply explained that investing is important so that you can have money to live on when you stop working. I think that’s all they need to understand for now. That’s enough to start saving! 

My 15-year-old got his first job this past summer and I told him “If you always save at least 10% of your paycheck to be invested in the stock market, you’ll probably have $1 million by the time you’re my age”. I told him that from now until he’s 18 he HAS to do that. After that, he can do what he wants. 

My hope is that by then he’ll understand at a deeper level what’s necessary to meet his goals and be able to take it from there. He understands the “why” and didn’t complain about what I said he had to do. Much like my stock picks, I could be totally wrong about this working out. But my conviction level is pretty high.

Jeff

Jason’s Random Words

While I have far more experience (and obviously skill) as an investor than Jeff, he’s got me beat as a parent. And frankly, it’s nice to have someone with more experience and a similar mindset about investing and saving to talk to about kids and money. I just hate that it’s Jeff. 

I kid. We should all be so lucky to have a Jeff in our lives. 

Anyways. Who wants a point? 

I can’t be my kid’s Jeff. 

Whew. That sucks, right? Jeff is someone I have a lot of common interests with and we have built a relationship around that. My kid doesn’t need an investing buddy. It’s a mistake to expect he will follow my passion for picking stocks, and a bit unreasonable to put that sort of pressure on a child. 

Don’t worry. I’m at peace with this. He’s already picked soccer over baseball. 

Seriously though, as a parent, managing my own expectations around my kid with money and investing may be the most important thing I do. After all, I was basically a money idiot until I was in my late 20s. If I help him build the skills and habits just to not be a money screwup, he will be ahead of me. And if I follow the example Jeff has laid out with his kids, he will be decades ahead of me, even if he never buys a single stock, much less reads a 10K. 

Lastly, I have had to come to terms that I need to let him make money mistakes. Jeff talked about that at the end of the second episode we did with Bro, and as someone who’s made a LOT of money mistakes, I think we all want our kids to do better. But they can’t always learn from mistakes we made before they were ever born. But if I can be there to help him learn the right lessons when the stakes are low, he will be prepared when the money — and the implications— are more meaningful.

Jason