I was trying to convince my son to start reading/watching some materials (which I recommended him) regarding personal finance, investing, FIRE etc. So far with not much success .
Recently he asked my about crypto (of course), because his colleague just made ~50 000 CHF out of 5 000 CHF on DOGE. Yeah…
So I got an idea to propose him something like: I give you xxxx CHF (was thinking about 1000 CHF, so he would really feel the pain when it’s lost) for playing on the markets. Of course, only after he goes through materials I gave him, after we talk about investing in general, etc. I would also provide some advices as regards what he would like to do with it and I hope that at the end he will end up with something at least close to 50% globally diversified ETF and 50% YOLO (shares, crypto, whatever). To be seen .
However, I would love to hear your opinions about this idea first. Plus - I don’t want to do all transactions, tracking etc. for him. I would like him to play with it, lose money with wrong orders, wrong decisions etc. He has to feel the pain by himself and (hopefully) learn something. The problem is that he is 17 years old, so I don’t know if there are any accounts for him to do it?
No clue about the accounts. The rest of it sounds good to me. He needs to be in the pilot seat, ideally do everything by himself, just take care somehow that he doesn’t end up in debt by shorting, buying puts etc.
How did your upbringing in the last 17 years look like regarding money/finances?
Did he get pocket money? Which expenses does he have to cover right now?
OK, was afraid it’s like that. But maybe it could be a nice addition to the gift for his 18th birthday .
I was trying to do my best since years. Over time it was changing, eg. I’ve started first as being his bank, so we had an excel sheet with nice graphs, where he was able to track how much his savings grow. There were 2 accounts there: current and savings one. I was paying him 10% interest per year for savings one (in very low interest rates environment), but there were some rules/limits as regards transferring/using the money from that account. I’m doing now the same with my daughter and it resonates more with her than my son. He always preferred to spend than save .
Now he is getting pocket money, according to following rules:
10 CHF for each year of age
12 CHF for each day of school (this is the amount he may eat well with at school’s cantine)
Every big buy over 400 CHF may be 33% financed by us
Some additional money, currently for hairdresser (28 CHF and transport tickets allowance 20 CHF (he got from us AG Night too ~100 CHF per year))
So not negligible amount of money each month, but then he needs to send us back:
50% of monthly gym fee (I’ve paid it for a year in advance in order to be able to get company’s discount)
Full monthly rate for insurance of his motorbike (again, paid in advance not to get penalty for monthly payments)
Loan for motorbike monthly repayment (I gave him a 2-years loan for 66% of the motorbike, with 5% interest, so he can feel it properly)
What I like is that he manages everything for himself. And sometimes tries to negotiate bigger buys with us. Plus - he tries to earn his money too, eg. he had 2-weeks summer job at my wife’s work and is tutoring younger pupils. He also tries to save money, by not spending it for food at school. So he comes home very often and cooks something for himself, which we are fine with. At the beginning it was only simple pasta, but it’s now more sophisticated/diverse/healthy.
Amazing stuff, thanks for sharing!
At what age did you introduce him to “money”?
One little correction about my earlier post:
There is possibility to have an investment-account on the name of your child and it automatically transfers it onto him on his 18th birthday.
For example True Wealth offers that, I’m sure others do to.
There were parents like that when I was young, I thought they’re freaks and felt glad my parents just said “yes” or “no” to requests. Now I think I’ll adopt something similar with my kids, imitation is the biggest form of flattery etc.
I think the lesson will work with more chances if it will be 1000CHF he earned somehow.
It is much easier to loose money you were “just” given, so even if it is a bit harder and trickier, just an idea here that you should try to make him “earn” this 1000 similar to other things you are already doing and then the “pain” will be more real, of course there should be some healthy balance there to not make it too tough for the kid.
I would be really interested to see how people who managed to earn and save good amount of money without regretting are educating their kids to be smart with money and learn that there is no “free lunch”.
I see that a lot of thoughts as well as trial and error went into introducing teenagers to investing.
My own investment journey started around with being gifted one IPO share of Swiss company Astra by my father. Back then, it was a obscure process to be dealt an allocation in IPO shares. I guess my father had to call in a longtime favor with someone from his bank or the stock exchange. The share price rose dramatically as I could read in the newspaper in the first few days. “Easy money” was thus imprinted in my 12 year old brain. I also had received a gold coin from my grandparents. It reached a good price in 1980 and then fell for the next 20 years. “gold is no store of value” was the next lesson for teenager me. Stock markets rose throughout my formation years but I didn’t have any money. And whatever I had, I spent on travels, camera equipment and partying.
Fast forward 20 years, my father gifted my son a portfolio of some Swiss stocks at age 15. He only told him that I - his father - was holding a few shares grandfather had gifted him.
Then came a phase when we tried to understand what my son could use the wealth for. It was meant to be a lesson in stock picking and HODLing. Grandfather directed a few trims and switches and at age 18, my son was told the substantial value of his portfolio. He understood he was not to touch it unless for a greater purpose. At the same time he used his pocket money to have splurging Sushi lunches with friends. I didn’t trust him with so much money yet.
At age 23, my son started to earn some money on the side and was friends with someone who traded crypto options and had crazy stories of fast money to tell. My son learned from his friend while I tried to instill some long-term thinking and robust asset allocation in him. As I am writing this, my son has expressed a goal to reduce his 100% crypto exposure soon. He is happy with 20% short-time gains while I casually show him my longer term crypto gains of 60%. I state that this is only 5% of my total wealth and that I am ready to lose it all. I also offered to share my investment strategy with him. There I am explaining the asset allocation to myself and track progress year by year. He is interested to read it. Maybe the message is hitting home?
As he is entering his 25th year, I feel it is now time to hand him the keys to his portfolio and let him make his own decisions. I made a lot of mistakes in my 20s and 30s and hope he makes them too, but only on a negligible part of the portfolio.
Lesson for parents: no need to do much until asked. Children tend to have a negative bias to their parents’ experience. There are other people in your children’s life who might expose them to investing.
That’s why I was thinking on offering him this, only if he reads 1-2 books I’ll give him and watch ~ 10-15 hours of videos about the topic (also given by me). Believe me - for him going through the books would be enough pain - not because of the content or how they are written, but because his attitude towards reading in general (which makes me so sad).
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