So, in my last piece of writing I talked about having conversations (and saving for a rainy day). So it was appropriate that at dinner the other day, I mentioned that one of my teenage boys must have saved enough to invest in a Vanguard ETF.
I should also disclose that this is not a "normal" dinner time conversation in our house – most nights we are talking about results from the weekend past, next week's football games, what's happening in cricket and occasionally, school work. There is also sibling banter, which I mostly try to ignore.
But tonight the conversation went from who was working this week, to spending, to saving, to investing.
It is something we have encouraged each of the boys to do once they get their first job. Not in individual shares (at least at first) – rather a low-cost index fund.
I remember when my eldest son set up his and saw his first monthly statement "Mum, I made more doing nothing then I did the whole month working".
It wasn't the same story for my second: he set his account up in late 2019… and it wasn't long before his holdings were less than his original deposit.
2020 was a good learning experience for both of them as they saw their investments drop. But neither were worried. Mostly because they have been shown "the chart" (yes, the one Scott bangs on about) and know that time is on their side… Now neither of them regularly check what is happening, they just know they have an investment that will almost certainly grow (meaningfully) over time.
But what is this chart I'm talking about? For those of you new here, Scott refers to it often. I'd even go far to say it's his favourite tool for illustrating the power of investing and how following a long-term diversified investment plan will help grow your wealth over time. I remember when I first started at the Fool, he suggested I print it out and keep it on my wall – I didn't do that, but I did save it (and more importantly I have shown it to my children).
It's not a secret, and if you aren't familiar with the Vanguard Index Chart, you can read all about it here. Please, take a look…
I won't lie. I often look at it with regret – regret that I didn't start sooner. I could say it's "because I didn't know". I could also say I found other "opportunities" (I have a penchant for boots and handbags). Both would be true. As I've gotten older, I like to think of myself as just a little wiser (I really do only have two feet), a little more balanced and a little more focused on where I want to be (financially). We all learn, we all move forward – it doesn't matter if we take baby steps or big leaps – just that we move forward.
So now it's son number three's turn to "get started" – before he uses all his savings to buy a car (we're trying to hold him off as long as possible – with two older brothers, and friends visiting, the street is beginning to look like a car yard).
And while we were talking about what we needed to do to set-up his account, it was son number four who showed the most interest in the conversation.
He's only just started work, and although he's been putting most of his weekly pay away he's not quite ready to move his savings from his bank account.
"Mum, can't you and dad just put in the difference and I pay you back?" He was very quick to understand how compounding works, so I get why he asked.
And while we probably could, that's not the lesson we want to teach and his time will come. If he is going to be an investor, he needs to be patient and understand it's a long game.
(It's also a good "carrot" to dangle when he asks (again) to use his savings to purchase the e-bike everyone has).
Fool on!
