I’m writing a really basic investor’s guide for my [adult children] - input welcome

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Topic Author
TheEleven
Posts: 107
Joined: Thu Jul 04, 2019 11:04 pm

I’m writing a really basic investor’s guide for my [adult children] - input welcome

Post by TheEleven »

I can’t find a super basic investment guide that I think would suit my daughters, or any young people with no interest whatsoever in such a “dad thing”. I can’t just recommend a Bogle book to them. I never read an investment book at that age and I know they won’t, not yet.

I myself know only about one percent of what the average Boglehead here knows about it all. But I figure knowing that one percent gets you to about 95% of your best investing potential, especially for someone young who only has basic accumulation to worry about for a long time. So can I present that one percent to them?

I’ve read Bernstein’s “If You Can” document and there are things about his approach I want to avoid. For one, he comes on too strong with “dad ‘splaining” - it’s too much of a boot camp of hard realities and hurdles. His approach works fine for me, but it definitely would not for my daughters. Also there is his reading assignments of several books. Honestly, how many people in your life, young or old, that know nothing of investing would ever entertain the idea of reading an entire book on investing, much less several? Bogleheads are a very niche part of the population.

I know my audience and I need a much gentler and briefer approach. (But I may include a list of further reading at the end of my document - suggestions welcome.) I have found that most people of any age are generally as skittish as wild bunnies when the topic of investing is raised. Have you experienced that? Now that I come to think about it, the older the person, the more skittish I’ve found them to be! Politics and religion are way easier to talk about! There is something taboo about investing.

So I’ve tried to put together a list, not necessarily complete yet, of very short sections (1/2 to 3 pages) covering the bare basics in the shortest way I can that still holds meaningful information. My idea is to tell the kids there aren’t a lot of details in there, but the most powerful basics are, and those quick basics are the tip of a mountain of historical fact and the investing knowledge of a lot of smart people. They don’t need to know the details, just the last little bits that the mountain of history and knowledge has lead up to.

Here is a list of sections I have defined so far, some are more or less done:

Introduction (done)
Time in the Market (done)
Investment Costs (done)
Index vs. Managed Funds (done)
Diversifying (done)
Asset Allocation (done)
Rebalancing (done)
Stay the Course (done)
To save you need to earn, and to invest you need to not spend it all (not started)
Indexing vs Stock Picking (not started)
Nominal vs Real Returns and Inflation (not started)
Others???

So far I am only targeting the very basics of accumulation and avoiding common mistakes. Decumulation is for later.

If anyone would like to look at these sections I will give a link to the documents below. I am open to any input y’all might have, or you may find them handy as a place to start with your own youngins if the material seems viable to you.

Fact checks and general notes welcome! I barely know this stuff myself.
Any other chapter subjects come to mind?
Any favorite quotes that might be added to the sections?
Anybody want to write their own short section that I haven’t?

One of my kids is ready to dive in and has opened an account at Fidelity. These very short sections aren’t necessarily meant to stand on their own. I’ll present one section at a time and have a computer in front of us so I can supplement the lesson with some active online trips to Portfolio Visualizer and other various destinations to make the section interactive between parent and kid and to give her further introduction to the various tools available on the internet.

I myself blew it and learned nothing of this until I was almost 60 a couple years ago and am now financially insecure. I desperately hope I can get my kids involved sooner than that so they don’t end up where I am.

Link to chapters on Google Drive - There are two formats for each section: Pages (Mac) and PDF:

https://drive.google.com/drive/folders/ ... sp=sharing

Edits - to clear up some items here:

Sorry I did not mention my daughters ages. They are not actually “kids”, they are 30 and 35. But, like me at that age, they know nothing about investing except what I have informally told one of them.

This is not a “book” headed for any kind of publication or meant as a stand alone manual. It is a little reading material to base interactive teaching sessions on as mentioned late in my OP and to give them something to take home and refer to later. But I do want it to be reasonably meaningful reference material.

The subject matter is investing for retirement only. Other finance issues are beyond the scope I’m going for here, though basics on taxes with regard to investments should be included.

The listing of chapters is not necessarily in any final order. I agree the first chapter should be on earning and saving.
Last edited by TheEleven on Sun May 09, 2021 10:45 am, edited 1 time in total.
User avatar
Mel Lindauer
Moderator
Posts: 31829
Joined: Mon Feb 19, 2007 8:49 pm
Location: Daytona Beach Shores, Florida
Contact:

Re: I’m writing a really basic investor’s guide for my kids - input welcome

Post by Mel Lindauer »

You've put what I consider to be the most important item too far down the list.
To save you need to earn, and to invest you need to not spend it all (not started)
Learning to live below one's means has to be Lesson #1. Regardless of how much you make, if you don't learn to do this, short of inheriting a fortune or hitting the lottery, you'll never attain financial security.
Best Regards - Mel | | Semper Fi
User avatar
Robert T
Posts: 2755
Joined: Tue Feb 27, 2007 9:40 pm
Location: 1, 0.2, 0.4, 0.5
Contact:

Re: I’m writing a really basic investor’s guide for my kids - input welcome

Post by Robert T »

Mel Lindauer wrote: Sun May 09, 2021 1:54 am Learning to live below one's means has to be Lesson #1.
+1. And as part of this, consider costs beyond the purchase price. Bigger house = bigger property taxes, utility bills, insurance, maintenance costs etc. Ditto for cars.
.
elle
Posts: 93
Joined: Thu Mar 13, 2014 3:13 pm

Re: I’m writing a really basic investor’s guide for my kids - input welcome

Post by elle »

Managing tax strategies while working/planning for the future?
Pre tax vs. post tax?
manatee2005
Posts: 1802
Joined: Wed Dec 18, 2019 9:17 pm

Re: I’m writing a really basic investor’s guide for my kids - input welcome

Post by manatee2005 »

How old are your daughters? There's a big difference in what you should include if they're 12 or 25.
User avatar
dodecahedron
Posts: 5584
Joined: Tue Nov 12, 2013 12:28 pm

Re: I’m writing a really basic investor’s guide for my kids - input welcome

Post by dodecahedron »

Mel Lindauer wrote: Sun May 09, 2021 1:54 am You've put what I consider to be the most important item too far down the list.
To save you need to earn, and to invest you need to not spend it all (not started)
Learning to live below one's means has to be Lesson #1. Regardless of how much you make, if you don't learn to do this, short of inheriting a fortune or hitting the lottery, you'll never attain financial security.
Strongly agree with the above.

Beyond that all important #1, I simply told my daughters when they got their first real jobs that the best thing they could do was simply plow as much as they can into the default option low cost index target fund in their respective 401k's (which happens to be Vanguard's). They listened and took the advice to heart, and in addition to maxed out 401ks, they also have Roth IRAs and HSAs, sensibly invested in low cost index funds.

Rather than reading detailed stuff about investments, young people's limited free time is better spent on enhancing their human capital, which includes reading and CPE classes relevant to one's professional development, taking care of one's health (nutrition, exercise, stress management, recreation, hobbies, spending time with friends).
Katietsu
Posts: 4958
Joined: Sun Sep 22, 2013 1:48 am

Re: I’m writing a really basic investor’s guide for my kids - input welcome

Post by Katietsu »

dodecahedron wrote: Sun May 09, 2021 4:48 am
Mel Lindauer wrote: Sun May 09, 2021 1:54 am You've put what I consider to be the most important item too far down the list.
To save you need to earn, and to invest you need to not spend it all (not started)
Learning to live below one's means has to be Lesson #1. Regardless of how much you make, if you don't learn to do this, short of inheriting a fortune or hitting the lottery, you'll never attain financial security.
Strongly agree with the above.

Beyond that all important #1, I simply told my daughters when they got their first real jobs that the best thing they could do was simply plow as much as they can into the default option low cost index target fund in their respective 401k's (which happens to be Vanguard's). They listened and took the advice to heart, and in addition to maxed out 401ks, they also have Roth IRAs and HSAs, sensibly invested in low cost index funds.

Rather than reading detailed stuff about investments, young people's limited free time is better spent on enhancing their human capital, which includes reading and CPE classes relevant to one's professional development, taking care of one's health (nutrition, exercise, stress management, recreation, hobbies, spending time with friends).
Yes. 100%.

Get a job.
Save automatically using a 401k or IRA.
Learn to use and recognize a low ER target date retirement fund.
LBYM, stay away from most debt, do not cash in your retirement account when you change jobs...
Mr. Rumples
Posts: 1239
Joined: Sun Aug 25, 2019 7:16 am

Re: I’m writing a really basic investor’s guide for my kids - input welcome

Post by Mr. Rumples »

The most helpful investing book I read is long out of print and outdated in many ways, yet the style, explanations and the principles might help.

Money Dynamics for the 1990s by Venita Vancaspel
https://www.amazon.com/Money-Dynamics-1 ... 0671661582

One of the ways I learned about money management and investing was by example. Every month my mother would take out a box of bills and pay them and when we got our edition of Changing Times magazine I'd sit down and absorb what I could. It started a lifelong habit.
chris319
Posts: 572
Joined: Thu Jan 28, 2021 6:04 pm

Re: I’m writing a really basic investor’s guide for my kids - input welcome

Post by chris319 »

I was toying with the idea of making a video along these lines, thinking that the younger generation is more likely to sit through a 5 - 10-minute video than to read a book. One problem is, there is so much cruft on the topic of investing on YouTube that would be competing with my video.

You should decide whether the book will be about investing specifically or financial planning in general.

In my video I was going to keep it fund- and fund-family agnostic, i.e. not push viewers into Vanguard or the S&P 500.

BTW, the retirement plan is correctly spelled 401(k) with the "k" enclosed in parentheses.

I came up with these general principles. Feel free to adapt them to your work.

1. Don’t try to strike it rich. (reasonable expectations with examples)

2. Open a brokerage account. (This would be accompanied by the names of several brokerages: Fidelity, Schwab, Vanguard, Merrill, TD Ameritrade, E-Trade).

3. Invest early and often. (Emphasize the long-term and "pay yourself first").

4. Index funds are your friends. (Explain index funds, explain difference with individual stock picking). Quote about "buy the haystack".

5. Don't try to time the market.

6. Keep expenses and taxes as low as possible.

7. Volatility cuts both ways. (There is upside volatility and downside volatility).

8. Buy and hold wins every time. Stay the course. Never sell in a panic.

I might also warn viewers away from Robinhood.
The only person you have to please in life is yourself.
chris319
Posts: 572
Joined: Thu Jan 28, 2021 6:04 pm

Re: I’m writing a really basic investor’s guide for my kids - input welcome

Post by chris319 »

I downloaded your manuscript and skimmed several of the pages.

There were some misspellings.

I would suggest writing and organizing the book in the "inverted pyramid" style.

The writing could be more terse to hold the reader's attention.

You need to define some terms before you introduce the reader to them, e.g. mutual fund.

The book should cover the mechanics of setting up an investment account. Describe how a purchase is made, define "shares". An expanded discussion of stock indices (or indexes) would be beneficial. Mention fractional shares.

You should touch upon the subject of taxes: taxable vs. IRA, taxable events (capital gains and dividend payments).

I would be happy to contribute ideas and help with the proofreading. I will be officially retired in three weeks and could use a project.

How do you plan to distribute this book?
The only person you have to please in life is yourself.
User avatar
F150HD
Posts: 3760
Joined: Fri Sep 18, 2015 7:49 pm

Re: I’m writing a really basic investor’s guide for my kids - input welcome

Post by F150HD »

exponential vs linear growth would be an absolute pre-requisite before any investing chapters (to me)

viewtopic.php?p=5285276#p5285276

viewtopic.php?f=10&t=316284

viewtopic.php?f=10&t=316352
Triple digit golfer
Posts: 7700
Joined: Mon May 18, 2009 5:57 pm

Re: I’m writing a really basic investor’s guide for my kids - input welcome

Post by Triple digit golfer »

Save a lot and compounding. That's what did it for me. I.e. if you save $2,000 a year for 40 years and earn 10% a year, you'll have $885,000. It will blow their minds.
User avatar
WarAdmiral
Posts: 287
Joined: Mon Jan 20, 2020 7:09 pm
Location: Boston

Re: I’m writing a really basic investor’s guide for my kids - input welcome

Post by WarAdmiral »

TheEleven wrote: Sun May 09, 2021 1:32 am I can’t find a super basic investment guide that I think would suit my daughters, or any young people with no interest whatsoever in such a “dad thing”. I can’t just recommend a Bogle book to them. I never read an investment book at that age and I know they won’t, not yet.

I myself know only about one percent of what the average Boglehead here knows about it all. But I figure knowing that one percent gets you to about 95% of your best investing potential, especially for someone young who only has basic accumulation to worry about for a long time. So can I present that one percent to them?

I’ve read Bernstein’s “If You Can” document and there are things about his approach I want to avoid. For one, he comes on too strong with “dad ‘splaining” - it’s too much of a boot camp of hard realities and hurdles. His approach works fine for me, but it definitely would not for my daughters. Also there is his reading assignments of several books. Honestly, how many people in your life, young or old, that know nothing of investing would ever entertain the idea of reading an entire book on investing, much less several? Bogleheads are a very niche part of the population.

I know my audience and I need a much gentler and briefer approach. (But I may include a list of further reading at the end of my document - suggestions welcome.) I have found that most people of any age are generally as skittish as wild bunnies when the topic of investing is raised. Have you experienced that? Now that I come to think about it, the older the person, the more skittish I’ve found them to be! Politics and religion are way easier to talk about! There is something taboo about investing.

So I’ve tried to put together a list, not necessarily complete yet, of very short sections (1/2 to 3 pages) covering the bare basics in the shortest way I can that still holds meaningful information. My idea is to tell the kids there aren’t a lot of details in there, but the most powerful basics are, and those quick basics are the tip of a mountain of historical fact and the investing knowledge of a lot of smart people. They don’t need to know the details, just the last little bits that the mountain of history and knowledge has lead up to.

Here is a list of sections I have defined so far, some are more or less done:

Introduction (done)
Time in the Market (done)
Investment Costs (done)
Index vs. Managed Funds (done)
Diversifying (done)
Asset Allocation (done)
Rebalancing (done)
Stay the Course (done)
To save you need to earn, and to invest you need to not spend it all (not started)
Indexing vs Stock Picking (not started)
Nominal vs Real Returns and Inflation (not started)
Others???

So far I am only targeting the very basics of accumulation and avoiding common mistakes. Decumulation is for later.

If anyone would like to look at these sections I will give a link to the documents below. I am open to any input y’all might have, or you may find them handy as a place to start with your own youngins if the material seems viable to you.

Fact checks and general notes welcome! I barely know this stuff myself.
Any other chapter subjects come to mind?
Any favorite quotes that might be added to the sections?
Anybody want to write their own short section that I haven’t?

One of my kids is ready to dive in and has opened an account at Fidelity. These very short sections aren’t necessarily meant to stand on their own. I’ll present one section at a time and have a computer in front of us so I can supplement the lesson with some active online trips to Portfolio Visualizer and other various destinations to make the section interactive between parent and kid and to give her further introduction to the various tools available on the internet.

I myself blew it and learned nothing of this until I was almost 60 a couple years ago and am now financially insecure. I desperately hope I can get my kids involved sooner than that so they don’t end up where I am.

Link to chapters on Google Drive - There are two formats for each section: Pages (Mac) and PDF:
https://drive.google.com/drive/folders/ ... sp=sharing
Read "A simple path to wealth" by JL Collins. He wrote this book for his daughter. I believe the concepts/behaviors explained in this book is what most young adults need internalized by the time they are ready to start investing.
Grt2bOutdoors
Posts: 23779
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: I’m writing a really basic investor’s guide for my kids - input welcome

Post by Grt2bOutdoors »

Triple digit golfer wrote: Sun May 09, 2021 8:11 am Save a lot and compounding. That's what did it for me. I.e. if you save $2,000 a year for 40 years and earn 10% a year, you'll have $885,000. It will blow their minds.
Yes, but to really drive the point home for the two daughters, I'd break it out by showing them for the first 25 years of savings it amounts to $221,000 but the last 15 years of the investment period is where the small snowball picks up steam down the hill to become a big avalanche of savings as it becomes worth $1,053,941. Formula is FV(0.10/12, 12*40, 166.66). That's assuming the kids are Dollar cost averaging into the account on a monthly basis at a rate of 166.66.

To your point, it will blow their minds.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
tibbitts
Posts: 13903
Joined: Tue Feb 27, 2007 6:50 pm

Re: I’m writing a really basic investor’s guide for my kids - input welcome

Post by tibbitts »

manatee2005 wrote: Sun May 09, 2021 3:42 am How old are your daughters? There's a big difference in what you should include if they're 12 or 25.
Ordinarily I'd assume more like 25 given an early-60s parent, but this is Bogleheads, so that's definitely not a safe assumption. Reading-age with sufficient comprehension... well, again it's Bogleheads, so probably the kids are at least two years old.
User avatar
sperry8
Posts: 2420
Joined: Sat Mar 29, 2008 9:25 pm
Location: Miami FL

Re: I’m writing a really basic investor’s guide for my kids - input welcome

Post by sperry8 »

I'd add in a chapter about buying stuff at the lowest price. This is different than saving, and my be easier for a child to understand. Yes, you can buy something, but shop around. Comparison price. Find a coupon. Get what you want, but try to get it at the lowest possible price. This teaches the lesson of frugality but it balances it with you can spend, just don't pay more than you need to.

When you think about it, this is a core BH lesson. Don't just invest. Invest in the fund with the lowest cost. Shop around - and pay the lowest ER and est tax ratio.
BH contests: 2020 #253 of 664 | 19 #233 of 645 | 18 #150 of 493 | 17 #516 of 647 | 16 #121 of 610 | 15 #18 of 552 | 14 #225 of 503 | 13 #383 of 433 | 12 #366 of 410 | 11 #113 of 369 | 10 #53 of 282
Globalviewer58
Posts: 650
Joined: Fri Jul 18, 2008 3:26 pm

Re: I’m writing a really basic investor’s guide for my kids - input welcome

Post by Globalviewer58 »

Another resource you might consider for their personal development are the Personal Finance videos aimed at young people on the Khan Academy website. Here’s a link: https://www.khanacademy.org/college-car ... al-finance

Short videos are helpful for younger people and the interactive nature helps the learning process which seems to be your real goal.
Triple digit golfer
Posts: 7700
Joined: Mon May 18, 2009 5:57 pm

Re: I’m writing a really basic investor’s guide for my kids - input welcome

Post by Triple digit golfer »

Grt2bOutdoors wrote: Sun May 09, 2021 8:37 am
Triple digit golfer wrote: Sun May 09, 2021 8:11 am Save a lot and compounding. That's what did it for me. I.e. if you save $2,000 a year for 40 years and earn 10% a year, you'll have $885,000. It will blow their minds.
Yes, but to really drive the point home for the two daughters, I'd break it out by showing them for the first 25 years of savings it amounts to $221,000 but the last 15 years of the investment period is where the small snowball picks up steam down the hill to become a big avalanche of savings as it becomes worth $1,053,941. Formula is FV(0.10/12, 12*40, 166.66). That's assuming the kids are Dollar cost averaging into the account on a monthly basis at a rate of 166.66.

To your point, it will blow their minds.
Wow, monthly vs annually is a significant difference in terminal value. Makes sense because my formula was contributing at the end of the period.
User avatar
Watty
Posts: 22661
Joined: Wed Oct 10, 2007 3:55 pm

Re: I’m writing a really basic investor’s guide for my kids - input welcome

Post by Watty »

If you have not seen it yet you should also read the wiki on investing policy statements(IPS).

https://www.bogleheads.org/wiki/Investm ... _statement

If you search the boards you can find lots of post where people have posted their IPS from review. Most of these are no more than a couple of pages long.

You did not say how old your kids are but at some point it would be good to make sure that they know enough to manage your investments if they need to some day which could be long before you are elderly. It would be good to have your IPS in order and if they are old enough that they understand it.

Kids will also pick up a lot more by example than what you say.
TheEleven wrote: Sun May 09, 2021 1:32 am I can’t just recommend a Bogle book to them. I never read an investment book at that age and I know they won’t, not yet.
You did not say how old they are but really until they are well in their 20s most of the topics you mentioned will be irrelevant to them and it might make investing seem irrelevant and intimidating.

A lot of other aspects about personal finance are probably more important to them now than investing so that they get a good financial start in life and it would be good to also cover things like;

The importance of your credit score
when to use credit card, car loan, etc.
bank accounts
credit scores and having your credit reports frozen
student loans
mortgages
emergency funds
health insurance
life insurance if they are married or have kids
Living below your means includes planning for unpredictable large expenses like car repairs, medical bills, etc. If you are living paycheck to paycheck you will not be able to handle these, even though you know that you will have large expenses like these sooner or later.


On the lighter side there is a "Dilbert’s One-Page Guide to Everything Financial" that Scott Adams wrote and put on an index card.

https://www.theretirementmanifesto.com/ ... fographic/

Apparently he was going to publish that as a one page book but could not find an publisher that would publish it.
User avatar
WoodSpinner
Posts: 1973
Joined: Mon Feb 27, 2017 1:15 pm

Re: I’m writing a really basic investor’s guide for my kids - input welcome

Post by WoodSpinner »

OP,

Here is a similar approach that is geared to fitting the advice on a Notecard .....

https://www.forbes.com/sites/zackfriedm ... ndex-card/

WoodSpinner
chris319
Posts: 572
Joined: Thu Jan 28, 2021 6:04 pm

Re: I’m writing a really basic investor’s guide for my kids - input welcome

Post by chris319 »

Read "A simple path to wealth" by JL Collins. He wrote this book for his daughter. I believe the concepts/behaviors explained in this book is what most young adults need internalized by the time they are ready to start investing.
J.L. Collins's book is 265 pages and the writing is quite longwinded. I'd be surprised if a high-school-age student would read the entire book all the way through. Even I found myself skipping ahead.
The only person you have to please in life is yourself.
chris319
Posts: 572
Joined: Thu Jan 28, 2021 6:04 pm

Re: I’m writing a really basic investor’s guide for my kids - input welcome

Post by chris319 »

A lot of other aspects about personal finance are probably more important to them now than investing so that they get a good financial start in life and it would be good to also cover things like;

The importance of your credit score
when to use credit card, car loan, etc.
bank accounts
credit scores and having your credit reports frozen
student loans
mortgages
emergency funds
health insurance
life insurance if they are married or have kids
Living below your means
If you would read his manuscript it's apparent that he's writing a book specifically about investing, not the general subject of financial planning. Topics like credit scores and mortgages don't really fit in.
The only person you have to please in life is yourself.
User avatar
WarAdmiral
Posts: 287
Joined: Mon Jan 20, 2020 7:09 pm
Location: Boston

Re: I’m writing a really basic investor’s guide for my kids - input welcome

Post by WarAdmiral »

chris319 wrote: Sun May 09, 2021 8:57 am
Read "A simple path to wealth" by JL Collins. He wrote this book for his daughter. I believe the concepts/behaviors explained in this book is what most young adults need internalized by the time they are ready to start investing.
J.L. Collins's book is 265 pages and the writing is quite longwinded. I'd be surprised if a high-school-age student would read the entire book all the way through. Even I found myself skipping ahead.
That's the case of every financial book with me. That's why i read it twice, once fast then slow with a highlighter.
csm
Posts: 454
Joined: Sun Mar 27, 2016 7:52 am

Re: I’m writing a really basic investor’s guide for my kids - input welcome

Post by csm »

I would include a lot of examples and scenarios in story-telling format.

For example, include the often cited scenario of whether they'd rather have $1 million today or a penny doubled for a month.

Tell stories about how person A took a specific action (early saving, saving x% of income, etc.) vs. the alternative and what they would have at age XX if they wanted to retire in either scenario.

Include different perspectives like the MMM example of saving - is it half of one's income in order to retire at an early age? You can look up the details, but the point would be to present different alternatives because not everyone will have the personality to follow the same path. One might prefer a go-getter style of high level education and competitive work environment while another may cherish a work/life balance with more family time, and there are ways to achieve financial security with both.
User avatar
Sandtrap
Posts: 13468
Joined: Sat Nov 26, 2016 6:32 pm
Location: Hawaii No Ka Oi , N. Arizona

Re: I’m writing a really basic investor’s guide for my kids - input welcome

Post by Sandtrap »

Education
Profession (choice)
Frugality (learned early and becomes natural)
Ability to save for the long term (taught but as for a lifetime habit, difficult in a culture that encourages spending and consumption)

Having something to invest (income stream, zero debt, and savings) comes before investing.
Love and reward of honest work in an area of one's passion.

j :D
Wiki Bogleheads Wiki: Everything You Need to Know
rixer
Posts: 734
Joined: Tue Sep 11, 2012 4:18 pm

Re: I’m writing a really basic investor’s guide for my kids - input welcome

Post by rixer »

I think it would be helpfull for you to steer her to some kind of balanced fund. This way, she doesn't have to make decisions she might not be capable of handling correctly if she has no interest in educating herself on these matters.
User avatar
abuss368
Posts: 25000
Joined: Mon Aug 03, 2009 2:33 pm
Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!
Contact:

Re: I’m writing a really basic investor’s guide for my kids - input welcome

Post by abuss368 »

I have a few books that are a favorite:

Jack Bogle “The Little Book of Common Sense Investing”

John Brennan “Straight Talk on Investing “ and also his new book “More Straight Talk on Investing”

Tony
John C. Bogle: “Simplicity is the master key to financial success."
Topic Author
TheEleven
Posts: 107
Joined: Thu Jul 04, 2019 11:04 pm

Re: I’m writing a really basic investor’s guide for my kids - input welcome

Post by TheEleven »

Mel Lindauer wrote: Sun May 09, 2021 1:54 am You've put what I consider to be the most important item too far down the list.
To save you need to earn, and to invest you need to not spend it all (not started)
Learning to live below one's means has to be Lesson #1. Regardless of how much you make, if you don't learn to do this, short of inheriting a fortune or hitting the lottery, you'll never attain financial security.
Thanks Mel! Agreed it needs to be first. The list is not in any final order.
Topic Author
TheEleven
Posts: 107
Joined: Thu Jul 04, 2019 11:04 pm

Re: I’m writing a really basic investor’s guide for my kids - input welcome

Post by TheEleven »

chris319 wrote: Sun May 09, 2021 7:44 am I downloaded your manuscript and skimmed several of the pages.

There were some misspellings.

I would suggest writing and organizing the book in the "inverted pyramid" style.

The writing could be more terse to hold the reader's attention.

You need to define some terms before you introduce the reader to them, e.g. mutual fund.

The book should cover the mechanics of setting up an investment account. Describe how a purchase is made, define "shares". An expanded discussion of stock indices (or indexes) would be beneficial. Mention fractional shares.

You should touch upon the subject of taxes: taxable vs. IRA, taxable events (capital gains and dividend payments).

I would be happy to contribute ideas and help with the proofreading. I will be officially retired in three weeks and could use a project.

How do you plan to distribute this book?
Thanks Chris. I do not plan to distribute this book, it is intended for an audience of two - my kids. If anyone else used it as a basis for their kids that would be great. Any input on spelling, punctuation, grammar is appreciated, I am not a polished writer. I agree on defining some terms like mutual fund. Some other things you mention are details I would personally help the kids with rather than detail in this very brief document. I appreciate your input!
chris319
Posts: 572
Joined: Thu Jan 28, 2021 6:04 pm

Re: I’m writing a really basic investor’s guide for my kids - input welcome

Post by chris319 »

My notes assumed there would be a broad audience for the book. I think there's a book here for a wider audience.

You've clearly put a lot of work into the graphs.
The only person you have to please in life is yourself.
Topic Author
TheEleven
Posts: 107
Joined: Thu Jul 04, 2019 11:04 pm

Re: I’m writing a really basic investor’s guide for my kids - input welcome

Post by TheEleven »

rixer wrote: Sun May 09, 2021 9:41 am I think it would be helpfull for you to steer her to some kind of balanced fund. This way, she doesn't have to make decisions she might not be capable of handling correctly if she has no interest in educating herself on these matters.
I could hold their hand and show them how to just put their money in a target date fund but my goal is to spark their interest in learning basic Boglehead investing concepts and handling it for themselves. I grew up without a dad to teach me these things (he died young) and I want it to be different for them. I want them to be capable. Everyone should be capable in this area, it's a shame it's not required from high school onwards. As a bonus hopefully at least one of them will be capable enough to handle it for me when I reach cognitive decline! My younger daughter is a paralegal. She can handle it, just needs to be shown. We are already putting this in place.
tibbitts
Posts: 13903
Joined: Tue Feb 27, 2007 6:50 pm

Re: I’m writing a really basic investor’s guide for my kids - input welcome

Post by tibbitts »

TheEleven wrote: Sun May 09, 2021 11:12 am
rixer wrote: Sun May 09, 2021 9:41 am I think it would be helpfull for you to steer her to some kind of balanced fund. This way, she doesn't have to make decisions she might not be capable of handling correctly if she has no interest in educating herself on these matters.
I could hold their hand and show them how to just put their money in a target date fund but my goal is to spark their interest in learning basic Boglehead investing concepts and handling it for themselves. I grew up without a dad to teach me these things (he died young) and I want it to be different for them. I want them to be capable. Everyone should be capable in this area, it's a shame it's not required from high school onwards. As a bonus hopefully at least one of them will be capable enough to handle it for me when I reach cognitive decline! My younger daughter is a paralegal. She can handle it, just needs to be shown. We are already putting this in place.
I really think it's more of a gradual process where kids watch what you're doing while they're growing up. In my case, we had one TV so watching Wall Street Week wasn't optional for me, and was usually accompanied by some conversation - even though not Boglehead-oriented for the most part. Similarly listening to parents discussing whether to buy this or that instead of something else, pros and cons of different insurance coverage, etc. will have a bigger effect than just telling someone what to do.
Topic Author
TheEleven
Posts: 107
Joined: Thu Jul 04, 2019 11:04 pm

Re: I’m writing a really basic investor’s guide for my kids - input welcome

Post by TheEleven »

chris319 wrote: Sun May 09, 2021 11:11 am My notes assumed there would be a broad audience for the book. I think there's a book here for a wider audience.

You've clearly put a lot of work into the graphs.
Yeah, as you noticed I'm not really a writer :happy and not really qualified with enough knowledge to attempt something official. I'm just driven to work with my kids on this and couldn't find anything I thought they would read. Actually there are others I wish I could reach. I have an older brother and sister-in-law who are retired. They have no idea where their money is. They "have a guy". Drives me crazy. Their "guy" may be fleecing them. Outside of this forum I know no one who knows even the basics.
Topic Author
TheEleven
Posts: 107
Joined: Thu Jul 04, 2019 11:04 pm

Re: I’m writing a really basic investor’s guide for my kids - input welcome

Post by TheEleven »

tibbitts wrote: Sun May 09, 2021 11:23 am
TheEleven wrote: Sun May 09, 2021 11:12 am
rixer wrote: Sun May 09, 2021 9:41 am I think it would be helpfull for you to steer her to some kind of balanced fund. This way, she doesn't have to make decisions she might not be capable of handling correctly if she has no interest in educating herself on these matters.
I could hold their hand and show them how to just put their money in a target date fund but my goal is to spark their interest in learning basic Boglehead investing concepts and handling it for themselves. I grew up without a dad to teach me these things (he died young) and I want it to be different for them. I want them to be capable. Everyone should be capable in this area, it's a shame it's not required from high school onwards. As a bonus hopefully at least one of them will be capable enough to handle it for me when I reach cognitive decline! My younger daughter is a paralegal. She can handle it, just needs to be shown. We are already putting this in place.
I really think it's more of a gradual process where kids watch what you're doing while they're growing up. In my case, we had one TV so watching Wall Street Week wasn't optional for me, and was usually accompanied by some conversation - even though not Boglehead-oriented for the most part. Similarly listening to parents discussing whether to buy this or that instead of something else, pros and cons of different insurance coverage, etc. will have a bigger effect than just telling someone what to do.
Unfortunately my kids are already grown up and the only example they got from me when they were young was how to spend money and not save it! I was your typical consumer, always trying to fill the void with more stuff.
Topic Author
TheEleven
Posts: 107
Joined: Thu Jul 04, 2019 11:04 pm

Re: I’m writing a really basic investor’s guide for my kids - input welcome

Post by TheEleven »

WarAdmiral wrote: Sun May 09, 2021 9:06 am
chris319 wrote: Sun May 09, 2021 8:57 am
Read "A simple path to wealth" by JL Collins. He wrote this book for his daughter. I believe the concepts/behaviors explained in this book is what most young adults need internalized by the time they are ready to start investing.
J.L. Collins's book is 265 pages and the writing is quite longwinded. I'd be surprised if a high-school-age student would read the entire book all the way through. Even I found myself skipping ahead.
That's the case of every financial book with me. That's why i read it twice, once fast then slow with a highlighter.
I also have read that book and several other of the books commonly mentioned in this forum. If I could spark enough interest in my adult kids to go on to further reading that would be the best. But realistically not too may people will read an entire book on asset allocation, etc. I personally don't think I know one adult who would, unfortunately.
Mr. Rumples
Posts: 1239
Joined: Sun Aug 25, 2019 7:16 am

Re: I’m writing a really basic investor’s guide for my kids - input welcome

Post by Mr. Rumples »

When I saw "kids" I was thinking just that - kids younger than 18. When it comes to adult children, its a different matter. While I don't have children, I have found my attempts to discuss investing is frustrating with my niece and nephews. If the interest isn't there, or if there is an aversion to it, its difficult. They are all smart, work hard and save, yet they want something simple and alas its just not that way. Good luck in this endeavor.

Learning to invest involves doing it and that takes time. There is so much "noise" out there for their attention. Perhaps the need to watch out for false promises and easy paths to wealth needs emphasis.

Somewhere I read, decades ago, don't invest in something you don't understand. That has served me well.
Monsterflockster
Posts: 733
Joined: Thu Nov 21, 2019 12:03 am

Re: I’m writing a really basic investor’s guide for my kids - input welcome

Post by Monsterflockster »

TheEleven wrote: Sun May 09, 2021 1:32 am I can’t find a super basic investment guide that I think would suit my daughters, or any young people with no interest whatsoever in such a “dad thing”. I can’t just recommend a Bogle book to them. I never read an investment book at that age and I know they won’t, not yet.

I myself know only about one percent of what the average Boglehead here knows about it all. But I figure knowing that one percent gets you to about 95% of your best investing potential, especially for someone young who only has basic accumulation to worry about for a long time. So can I present that one percent to them?

I’ve read Bernstein’s “If You Can” document and there are things about his approach I want to avoid. For one, he comes on too strong with “dad ‘splaining” - it’s too much of a boot camp of hard realities and hurdles. His approach works fine for me, but it definitely would not for my daughters. Also there is his reading assignments of several books. Honestly, how many people in your life, young or old, that know nothing of investing would ever entertain the idea of reading an entire book on investing, much less several? Bogleheads are a very niche part of the population.

I know my audience and I need a much gentler and briefer approach. (But I may include a list of further reading at the end of my document - suggestions welcome.) I have found that most people of any age are generally as skittish as wild bunnies when the topic of investing is raised. Have you experienced that? Now that I come to think about it, the older the person, the more skittish I’ve found them to be! Politics and religion are way easier to talk about! There is something taboo about investing.

So I’ve tried to put together a list, not necessarily complete yet, of very short sections (1/2 to 3 pages) covering the bare basics in the shortest way I can that still holds meaningful information. My idea is to tell the kids there aren’t a lot of details in there, but the most powerful basics are, and those quick basics are the tip of a mountain of historical fact and the investing knowledge of a lot of smart people. They don’t need to know the details, just the last little bits that the mountain of history and knowledge has lead up to.

Here is a list of sections I have defined so far, some are more or less done:

Introduction (done)
Time in the Market (done)
Investment Costs (done)
Index vs. Managed Funds (done)
Diversifying (done)
Asset Allocation (done)
Rebalancing (done)
Stay the Course (done)
To save you need to earn, and to invest you need to not spend it all (not started)
Indexing vs Stock Picking (not started)
Nominal vs Real Returns and Inflation (not started)
Others???

So far I am only targeting the very basics of accumulation and avoiding common mistakes. Decumulation is for later.

If anyone would like to look at these sections I will give a link to the documents below. I am open to any input y’all might have, or you may find them handy as a place to start with your own youngins if the material seems viable to you.

Fact checks and general notes welcome! I barely know this stuff myself.
Any other chapter subjects come to mind?
Any favorite quotes that might be added to the sections?
Anybody want to write their own short section that I haven’t?

One of my kids is ready to dive in and has opened an account at Fidelity. These very short sections aren’t necessarily meant to stand on their own. I’ll present one section at a time and have a computer in front of us so I can supplement the lesson with some active online trips to Portfolio Visualizer and other various destinations to make the section interactive between parent and kid and to give her further introduction to the various tools available on the internet.

I myself blew it and learned nothing of this until I was almost 60 a couple years ago and am now financially insecure. I desperately hope I can get my kids involved sooner than that so they don’t end up where I am.

Link to chapters on Google Drive - There are two formats for each section: Pages (Mac) and PDF:

https://drive.google.com/drive/folders/ ... sp=sharing

Edits - to clear up some items here:

Sorry I did not mention my daughters ages. They are not actually “kids”, they are 30 and 35. But, like me at that age, they know nothing about investing except what I have informally told one of them.

This is not a “book” headed for any kind of publication or meant as a stand alone manual. It is a little reading material to base interactive teaching sessions on as mentioned late in my OP and to give them something to take home and refer to later. But I do want it to be reasonably meaningful reference material.

The subject matter is investing for retirement only. Other finance issues are beyond the scope I’m going for here, though basics on taxes with regard to investments should be included.

The listing of chapters is not necessarily in any final order. I agree the first chapter should be on earning and saving.
Too much reading for people not interested in a “dad thing.” You need to put it in some terms they understand. Might I recommend:

“VTI and Chill”

That’s it.
Topic Author
TheEleven
Posts: 107
Joined: Thu Jul 04, 2019 11:04 pm

Re: I’m writing a really basic investor’s guide for my kids - input welcome

Post by TheEleven »

Monsterflockster wrote: Sun May 09, 2021 11:50 am
Too much reading for people not interested in a “dad thing.” You need to put it in some terms they understand. Might I recommend:

“VTI and Chill”

That’s it.
That's the thing I'm running in to, trying to find that balance to present as briefly as possible for someone not that interested, yet still keep it interesting and educate. "VTI and Chill" is not a bad idea, you and I know that, but we know that because we are educated about it. Without any further education a person will just fall into behavioral mistakes as time goes by and things happen in the market.
chris319
Posts: 572
Joined: Thu Jan 28, 2021 6:04 pm

Re: I’m writing a really basic investor’s guide for my kids - input welcome

Post by chris319 »

"VTI and chill" is simple advice but you want to indoctrinate them well enough that they don't get involved in the likes of GameStop on Robinhood, which is competing for a young person's attention and account. Or that they don't throw themselves in front of a train like that other Robinhood client did.

J.L. Collins's book is essentially "VTSAX and chill" with 260 pages of verbiage as filler.
The only person you have to please in life is yourself.
rixer
Posts: 734
Joined: Tue Sep 11, 2012 4:18 pm

Re: I’m writing a really basic investor’s guide for my kids - input welcome

Post by rixer »

TheEleven wrote: Sun May 09, 2021 11:12 am
rixer wrote: Sun May 09, 2021 9:41 am I think it would be helpfull for you to steer her to some kind of balanced fund. This way, she doesn't have to make decisions she might not be capable of handling correctly if she has no interest in educating herself on these matters.
I could hold their hand and show them how to just put their money in a target date fund but my goal is to spark their interest in learning basic Boglehead investing concepts and handling it for themselves. I grew up without a dad to teach me these things (he died young) and I want it to be different for them. I want them to be capable. Everyone should be capable in this area, it's a shame it's not required from high school onwards. As a bonus hopefully at least one of them will be capable enough to handle it for me when I reach cognitive decline! My younger daughter is a paralegal. She can handle it, just needs to be shown. We are already putting this in place.
I agree, that's certainly the best way. However, you mentioned that she likely wouldn't read anything on investing even if you recommended some material. That's why I suggested a balanced fund. She could do worse.
BigJohn
Posts: 1992
Joined: Wed Apr 02, 2014 11:27 pm

Re: I’m writing a really basic investor’s guide for my [adult children] - input welcome

Post by BigJohn »

This is what I gave to all my kids, nieces and nephews. Short, simple and spot on!

https://www.etf.com/docs/IfYouCan.pdf
"The greatest enemy of a good plan is the dream of a perfect plan" - Carl Von Clausewitz
chris319
Posts: 572
Joined: Thu Jan 28, 2021 6:04 pm

Re: I’m writing a really basic investor’s guide for my [adult children] - input welcome

Post by chris319 »

To OP: in your manuscript you want to say "eighth wonder of the world". Note the spelling of eighth. You want the ordinal number.
The only person you have to please in life is yourself.
Topic Author
TheEleven
Posts: 107
Joined: Thu Jul 04, 2019 11:04 pm

Re: I’m writing a really basic investor’s guide for my kids - input welcome

Post by TheEleven »

Grt2bOutdoors wrote: Sun May 09, 2021 8:37 am
Triple digit golfer wrote: Sun May 09, 2021 8:11 am Save a lot and compounding. That's what did it for me. I.e. if you save $2,000 a year for 40 years and earn 10% a year, you'll have $885,000. It will blow their minds.
Yes, but to really drive the point home for the two daughters, I'd break it out by showing them for the first 25 years of savings it amounts to $221,000 but the last 15 years of the investment period is where the small snowball picks up steam down the hill to become a big avalanche of savings as it becomes worth $1,053,941. Formula is FV(0.10/12, 12*40, 166.66). That's assuming the kids are Dollar cost averaging into the account on a monthly basis at a rate of 166.66.

To your point, it will blow their minds.
Thanks, I do address this in the section on "Time in the Market".
Topic Author
TheEleven
Posts: 107
Joined: Thu Jul 04, 2019 11:04 pm

Re: I’m writing a really basic investor’s guide for my [adult children] - input welcome

Post by TheEleven »

chris319 wrote: Sun May 09, 2021 5:08 pm To OP: in your manuscript you want to say "eighth wonder of the world". Note the spelling of eighth. You want the ordinal number.
Thanks for the spell check - fixed!
goblue100
Posts: 1328
Joined: Sun Dec 01, 2013 10:31 am

Re: I’m writing a really basic investor’s guide for my [adult children] - input welcome

Post by goblue100 »

You sure this doesn't cover what you want?
https://www.amazon.com/If-You-Can-Mille ... B00JCC5JKI
If You Can is a short, inexpensive e-booklet aimed at getting twenty-somethings with their first 401(k) started on the path to retirement saving and investing
Financial planners are savers. They want us to be 95 percent confident we can finance a 30-year retirement even though there is an 82 percent probability of being dead by then. - Scott Burns
LivingTheDream
Posts: 86
Joined: Sun Oct 18, 2020 10:30 am
Location: Savannah, GA

Re: I’m writing a really basic investor’s guide for my [adult children] - input welcome

Post by LivingTheDream »

I've done something similar for my young adult children. I agree with much of the advice already given...

keep it short & simple (IMO, 15 minutes)
maximize earnings (education, training, investing in professional development)
emphasize savings rate (living below their means)
invest early, often & regularly
maximize free money (I didn't notice any comments about employer match)
keep costs low
make simple (easily managed) investing decisions
Living The Dream
oldfatguy
Posts: 999
Joined: Tue Feb 27, 2018 1:38 pm

Re: I’m writing a really basic investor’s guide for my [adult children] - input welcome

Post by oldfatguy »

Why do your 30+ year old children need investing information from you?
Topic Author
TheEleven
Posts: 107
Joined: Thu Jul 04, 2019 11:04 pm

Re: I’m writing a really basic investor’s guide for my kids - input welcome

Post by TheEleven »

chris319 wrote: Sun May 09, 2021 6:47 am I was toying with the idea of making a video along these lines, thinking that the younger generation is more likely to sit through a 5 - 10-minute video than to read a book. One problem is, there is so much cruft on the topic of investing on YouTube that would be competing with my video.

You should decide whether the book will be about investing specifically or financial planning in general.

In my video I was going to keep it fund- and fund-family agnostic, i.e. not push viewers into Vanguard or the S&P 500.

BTW, the retirement plan is correctly spelled 401(k) with the "k" enclosed in parentheses.

I came up with these general principles. Feel free to adapt them to your work.

1. Don’t try to strike it rich. (reasonable expectations with examples)

2. Open a brokerage account. (This would be accompanied by the names of several brokerages: Fidelity, Schwab, Vanguard, Merrill, TD Ameritrade, E-Trade).

3. Invest early and often. (Emphasize the long-term and "pay yourself first").

4. Index funds are your friends. (Explain index funds, explain difference with individual stock picking). Quote about "buy the haystack".

5. Don't try to time the market.

6. Keep expenses and taxes as low as possible.

7. Volatility cuts both ways. (There is upside volatility and downside volatility).

8. Buy and hold wins every time. Stay the course. Never sell in a panic.

I might also warn viewers away from Robinhood.
“Pay yourself first” - I forgot about that little quote, will definitely feature it up front. Possibly the single most important thing. I think in my chapters I hit almost all the same points you mention one way or another. Can you explain #7?
chris319
Posts: 572
Joined: Thu Jan 28, 2021 6:04 pm

Re: I’m writing a really basic investor’s guide for my [adult children] - input welcome

Post by chris319 »

Can you explain #7?
A simple metaphor:

A non-volatile stock/fund: three steps forward, two steps backwards. Over time the number of steps forward will outnumber the steps backwards.

A volatile stock/fund: ten steps forward, eight steps backwards. The swings are greater. Higher highs and lower lows.
The only person you have to please in life is yourself.
Tattarrattat
Posts: 238
Joined: Wed Aug 19, 2020 6:05 pm

Re: I’m writing a really basic investor’s guide for my [adult children] - input welcome

Post by Tattarrattat »

Might also consider giving them "personal finance for dummies." Covers all of personal finance, not just investing. Straight forward advice, easy to read, accessible to a novice.
Post Reply