Talking to Children About Savings and Investments
Talking To Children About Savings and Investments
The Reproductive Habits of the Great American Greenback
I recently gave each of my children a $100 bill. Then I said, “Do you think you can earn and save $100 each week, for 50 weeks every year, until you are 30 years old?”
They said, “Yes, we can do that.”
“Good, that means in 20 years you should have saved about $500,000! And if you invest it well, you will each be receiving over $100,000 per year in income. This is, of course, in addition to the income you will earn from work. (Past performance is no guarantee of future performance).
“If you don’t spend your principal, and you let your investments grow for 30 years, they will be worth about $2,500,000 and you’ll each earn about $500,000 per year, in addition to money you earn from work.
“If you let your investments grow for 50 years, they should be worth about $40,000,000 and earn about $8,000,000 per year, in addition to what you’ll earn from work. All this is possible with the power of compound interest.
The best advice I can give you is a quote from Ray Dalio, who oversees about $150 billion dollars for the hedge fund Bridgewater & Associates:
“Above all else, I want you to think for yourself—to decide 1) what you want, 2) what is true and 3) what to do about it. I want you to do that in a clear-headed thoughtful way, so that you get what you want.”
I then told them, “Remember the term “compound interest” and study it in school and throughout your life. By the time you reach the ripe old age of 100 years, you should be a billionaire, thanks to the power of compound interest.
“Now, boys, what are you going to do with all those investments and all that income? With great wealth comes great responsibility.”
Richard W. Gayton, CEO and President of Lakeside Virtual Family Office (LVFO), advises investors on how to behave in response to economic changes and conditions that can influence and impact their investments. His blogs offer timeless advice on how one can avoid common mistakes in investing. This is the trademark of how Mr. Gayton and LVFO map out a strategy to protect their clients’ wealth. For more information, please visit: www.lakesidevfo.com.