Begin Investing With Just $1
No matter how much money you have saved for retirement, or how old you are now, you probably look back and think, “I wish I would have started sooner.” And while you can tell your children and your grandchildren they need to start saving and investing as soon as possible, they may not start early enough. They may think they don’t have enough income to invest yet, or that they have plenty of time to do so later. Share the following four steps by Jeff Reeves of InvestorPlace.com with your children or grandchildren so they can easily begin investing and building a retirement savings TODAY with as little as $1 a day.
- Begin by having your child or grandchild save $1 a day for a year: This shows discipline, creates a long-term goal and builds confidence as it is an easy goal to achieve. Once they have that initial $365 to invest, they should have many options to choose from, for example six $60 stocks, or 12 $30 stocks, depending on their strategy.
- Identify the strategy: While still saving those initial funds, help identify your child or grandchild’s risk tolerance and type of investment they want to make – capital preservation, income, value, growth, etc. Working with your financial advisor is recommended when making any risk assessment.
- Create and practice an action plan: Your child or grandchild may want to rush out as soon as they can with $30 or $60 to buy his or her first investment, or you may feel inclined to give them the money to do so. This should be avoided to help build the discipline of saving, and to allow time for on-paper investment practice. Becoming familiar with fundamental analyses of investments, and tracking values semi-monthly over the year as your child or grandchild saves their initial $365 will help them better monitor potential purchases before investing.
- Don’t do too much too fast: Be sure you review progress with your child or grandchild at least during their first year of investing, and warn them about getting in over their heads. This is a long-term practice that can impact their future. If your child or grandchild finds great success or experiences troublesome setbacks, have them promise to consult you before making any sudden sales or purchases.
While it may seem easier to create savings accounts and invest your own money for your children and grandchildren, it is important for them to have the discipline and the know-how to do it themselves. You cannot provide for them forever. By helping to build their understanding of the importance of retirement funds and investments early in life, you are helping to secure their future without enabling them.
Do They Or Don’t They? – Fifty-eight percent of more than 2,500 Americans surveyed in July 2012 believe that “upper income” people do not pay their “fair share” of federal income taxes. From 2009 tax data, the top 5 percent of U.S. taxpayers pay 59 percent of all federal income taxes (source: Pew Research Center, Internal Revenue Service, BTN Research).
Top Rating – Thirteen U.S. states have a higher credit rating with S&P than does the U.S. government (source: S&P, BTN Research).
Count Me In – Twenty-seven percent of individual stock investors were “bullish” two days after the 2008 Lehman Brothers collapse, while 33 percent of investors are “bullish” today (source: American Association of Individual Investors, BTN Research).