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Making investing interesting


Wight Flight

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Wight Flight

My life has been a financial rollercoaster with quite a few bad decisions, and also some bad luck along the way. So I have never been an investor in the traditional way.

I would like my 17 year old to avoid the stress that money (or to be more accurate cashflow) has brought me.

He has been given £1,000. He has spent £250 on 'stuff' and the balance is burning a hole in his pocket. He wants to spend it but doesn't know why or what on.

He is a bright lad, loves learning and will watch endless youtube stuff.

If he is sensible, he can save through university and his first few years of work will pay him far more than he could sensibly spend. 

So my question is, how do I make investing interesting? I get the impression that many here see it as a hobby (albeit one that makes money). How do I give him the 'bug'?

What can be do with his £750 (and currently an extra £100 per month spare) that will actually be of interest to a 17 year old and also get him a useful mindset for the future?

 

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Sex and dugs ad rock ‘n roll.  

Seriously, he is young. Investing can come in a few years. He needs to live a little. 

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Show him a compound interest calculator. Really drill it into him how his 30 year old self will appreciate what he did prior. 

This short series isn't "interesting" but is a very powerful and easy to implement method especially if starting at 17

 If he wants to get more involved and have a hands on approach I came across this youtuber the other week. Makes some good content that he may find interesting and incentivising.

https://www.youtube.com/channel/UCbta0n8i6Rljh0obO7HzG9A/videos

 

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57 minutes ago, Wight Flight said:

My life has been a financial rollercoaster with quite a few bad decisions, and also some bad luck along the way. So I have never been an investor in the traditional way.

I would like my 17 year old to avoid the stress that money (or to be more accurate cashflow) has brought me.

He has been given £1,000. He has spent £250 on 'stuff' and the balance is burning a hole in his pocket. He wants to spend it but doesn't know why or what on.

He is a bright lad, loves learning and will watch endless youtube stuff.

If he is sensible, he can save through university and his first few years of work will pay him far more than he could sensibly spend. 

So my question is, how do I make investing interesting? I get the impression that many here see it as a hobby (albeit one that makes money). How do I give him the 'bug'?

What can be do with his £750 (and currently an extra £100 per month spare) that will actually be of interest to a 17 year old and also get him a useful mindset for the future?

 

Invest it in himself, not the market

Maybe a udemy course or even finding a new hobby. 

 

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I like the compound interest idea, the xthe wonder of the world, Einstein and all.  Also maybe buy some silver coins and show him where to track price.  Maybe a nice presentation box too with some space for more.  Via internet or with a nice trip to London, with some footie and all.  Or maybe what my dad did for me - buy some divy paying shares to watch the money come in, even attend the AGM, again with more footie and all.

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9 hours ago, Wight Flight said:

My life has been a financial rollercoaster with quite a few bad decisions, and also some bad luck along the way. So I have never been an investor in the traditional way.

I would like my 17 year old to avoid the stress that money (or to be more accurate cashflow) has brought me.

He has been given £1,000. He has spent £250 on 'stuff' and the balance is burning a hole in his pocket. He wants to spend it but doesn't know why or what on.

He is a bright lad, loves learning and will watch endless youtube stuff.

If he is sensible, he can save through university and his first few years of work will pay him far more than he could sensibly spend. 

So my question is, how do I make investing interesting? I get the impression that many here see it as a hobby (albeit one that makes money). How do I give him the 'bug'?

What can be do with his £750 (and currently an extra £100 per month spare) that will actually be of interest to a 17 year old and also get him a useful mindset for the future?

 

Buy him

Intelligent Investor Ben Graham. Explain its not that simple anymore but the gust is there.

Reminiscences of a Stock Operator: and The Investment Strategies of Jesse Livermore. Explains the problems of over trading.

Accounts Demystified: The Astonishingly Simple Guide To Accounting. Most accounting beyond this book is a con.

Then get him to mess with excel, compounding money.

Then get him to compound debt.

 

 

 

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Wight Flight
5 minutes ago, spygirl said:

Buy him

Intelligent Investor Ben Graham. Explain its not that simple anymore but the gust is there.

Reminiscences of a Stock Operator: and The Investment Strategies of Jesse Livermore. Explains the problems of over trading.

Accounts Demystified: The Astonishingly Simple Guide To Accounting. Most accounting beyond this book is a con.

Then get him to mess with excel, compounding money.

Then get him to compound debt.

 

 

 

Thanks. He already knows about compound interest, and books are a non-starter because a) He is 17 and b) He is dyslexic.

An audio book would be an option but youtube would be ideal.

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7 minutes ago, Wight Flight said:

Thanks. He already knows about compound interest, and books are a non-starter because a) He is 17 and b) He is dyslexic.

An audio book would be an option but youtube would be ideal.

OK, let him mess about on excel.

Compound money and debt is something that has to be seen, on the screen, for it to sink in.

 

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41 minutes ago, Wight Flight said:

Thanks. He already knows about compound interest, and books are a non-starter because a) He is 17 and b) He is dyslexic.

An audio book would be an option but youtube would be ideal.

I suspect just sending him a few videos and the youtube algos could do the rest.

One option could be to try and incentivise him a little if you can. For every £1 he saves/invests you will match it 25% (or however much you would like). Additionally when he turns 18 he can open a LISA and a SIPP and can get an additional 25% in each account. So would be getting a good bonus on every contribution

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I'm not sure that is interesting.

I do take delight at tax avoidance but I've always taken the long view on investments: silently grinding on, compounding and beating inflation with good years outnumbering the bad ones until it doubles once and then again and then again.

That doesn't square with most non-investors' view of it as some kind of secret Gordon Gecko get rich quick scheme.

Though if you wish to sell the idea then you could note that I bought my house with some maturing investments without leaving myself short.

£750 sounds like ideal rainy day money to me, first car breaks down - sorted.

I'd actually stick it premium bonds. Safe, no fees, no fretting about pathetically low interest rates, and maybe £25 in beer money every couple of years.

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13 hours ago, One percent said:

Sex and dugs ad rock ‘n roll.  

Seriously, he is young. Investing can come in a few years. He needs to live a little. 

If the large proportion of society is doing that do you think it would be prudent to follow them? Considering that most adults are starting their life until their mid-twenties, with a boat load of debt, poor career prospects and living standards.

Delaying gratification a few years and getting into a different mindset from your peers could be very rewarding long term.

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7 minutes ago, A_P said:

If the large proportion of society is doing that do you think it would be prudent to follow them? Considering that most adults are starting their life until their mid-twenties, with a boat load of debt, poor career prospects and living standards.

Delaying gratification a few years and getting into a different mindset from your peers could be very rewarding long term.

You are however talking about diverting a portion of your wages into investments which is absolutely a good idea; especially if combined with tax avoidance.  Let others' wasteful spending pay your dividends.

This however is a one off £750.  With good non-speculative investment that might well nominally double very fifteen years and in real terms every twenty; so in forty years' time when he's 60 that might be worth all of £3,000.

If it was £75,000 turning into a real terms £300,000 then absolutely invest it; but it isn't.

What would you rather have:  £750 at 20 or £3,000 at 60?

 

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4 minutes ago, Frank Hovis said:

You are however talking about diverting a portion of your wages into investments which is absolutely a good idea; especially if combined with tax avoidance.  Let others' wasteful spending pay your dividends.

This however is a one off £750.  With good non-speculative investment that might well nominally double very fifteen years and in real terms every twenty; so in forty years' time when he's 60 that might be worth all of £3,000.

If it was £75,000 turning into a real terms £300,000 then absolutely invest it; but it isn't.

What would you rather have:  £750 at 20 or £3,000 at 60?

 

Not its not. £750 is the starting point.

Quote

if he is sensible, he can save through university and his first few years of work will pay him far more than he could sensibly spend. 

 

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3 minutes ago, A_P said:

Not its not. £750 is the starting point.

 

Maybe.

When people at work have asked me what is the minimum they should have to start investing or share dealing I say £10k; anything below that leave it in the building society as part of investing is being able to absorb losses.

I bought my first shares aged 22, Eurotunnel.  £2k.  I was going to be rich.

They tanked; I was gutted.

Moral: if you only have £2k then do not put it at risk.

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6 minutes ago, Frank Hovis said:

Maybe.

When people at work have asked me what is the minimum they should have to start investing or share dealing I say £10k; anything below that leave it in the building society as part of investing is being able to absorb losses.

I bought my first shares aged 22, Eurotunnel.  £2k.  I was going to be rich.

They tanked; I was gutted.

Moral: if you only have £2k then do not put it at risk.

moral of the story is diversification.

You can start with £100 these days. Vanguard is practically free

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Wight Flight
4 hours ago, A_P said:

Not its not. £750 is the starting point.

 

Yes - that is the point.

He can save about £100 a month now from his allowance / work (nothing to spend his money on at college)

At university he will get a bursary and wages that means he will have more than those around him. So again the opportunity to save.

For his first three years at work he will get paid £30k + per year with most living costs covered and his university fees written off.

Which is really the point of this thread. He could end up at 24 as a qualified engineer with three year's experience and £70k+ invested - or he could spunk it all on expensive trainers.

He has hobbies but they are pretty much all paid for by other means or provided free by college, and he has no need for a rainy day fund as I cover motorbike / car etc.

And he isn't a child. He is doing some serious A levels including maths and understands how the world works - he has grown up with me working from home so understands the stress lack of cashflow can bring.

Therefore, how do I make investing something that would grow into the hobby that many here find it to be?

 

 

 

 

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44 minutes ago, Wight Flight said:

Therefore, how do I make investing something that would grow into the hobby that many here find it to be?

 

I have no idea, you'll both have to find what works for him. and by investing do you mean trading?

One of the most powerful ways to invest is one of the most simple, can be completely hands off. In fact by leaving it completely alone It's proven to beat the majority of active fund managers, let alone the normal people on the street. 

If he wants to trade or actively invest, one could expect:

I saw this on the UK subreddit the other day:

dl7a7kzwc7f31.jpg?width=960&crop=smart&a

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leonardratso
38 minutes ago, A_P said:

I have no idea, you'll both have to find what works for him. and by investing do you mean trading?

One of the most powerful ways to invest is one of the most simple, can be completely hands off. In fact by leaving it completely alone It's proven to beat the majority of active fund managers, let alone the normal people on the street. 

If he wants to trade or actively invest, one could expect:

I saw this on the UK subreddit the other day:

dl7a7kzwc7f31.jpg?width=960&crop=smart&a

hehe that CNA looks like mine, i havent got all the other shite though, and am only 7% down overall, but i have some goldies that are + 28% and some other commodities that are +30%.

pure luck and timing over the short term, long term might be a bit better.

 

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On 17/08/2019 at 15:39, Wight Flight said:

Therefore, how do I make investing something that would grow into the hobby that many here find it to be?

 

You'll presumably have seen Warren Buffet's short letter to his wife:
 

Quote

 

Assuming the 80-something Buffett dies before her, the Sage of Omaha has left these instructions in his will: “My advice to the trustee [for my wife] could not be more simple: Put 10 per cent of the cash in short-term government bonds and 90 per cent in very low-cost S&P 500 index fund.” That’s it.

No Berkshire stock for the current Mrs Buffett, no rocking real estate investments, no hot hedge funds, just a plain vanilla index fund (Buffett recommends the low-cost Vanguard funds).

 

 

If you want to make it interesting; well I used to gauge what it could buy.  Initially the motorbike I wanted, then the car, then the house. By the time I bought the house I could have bought several.  Stock markets really only make the news when they lose money; some years I have been well into double digit gains and obviously the bigger the pot the more that means in cash.  Though there are downsides and you have to learn to take the long view; I think I'm about £40k down over the last couple of weeks; face bothered? Nah.

Also project it forward on a spreadsheet - take 2% inflation off and add 5% return each year, add in expected annual investment and see where it goes.  The numbers get very large; at what point is it at the level where you don't need to make any more so can retire.  You would be surprised how early that is.

And the most interesting bit for me is investing such that you reclaim all of your income tax (the annual big cheque back from the revenue in May is joyous) and pay no tax on your investment income or gains.  I am currently accumulating sufficient cash to do this with the next VCT issue from my prefered managers but I have also done it with a SIPP.

Tax on £30k is I think £3,500.  Make it a target to get all of that back each year because it is a great feeling.

 

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1 hour ago, Frank Hovis said:

Also project it forward on a spreadsheet - take 2% inflation off and add 5% return each year, add in expected annual investment and see where it goes.  The numbers get very large; at what point is it at the level where you don't need to make any more so can retire.  You would be surprised how early that is.

@Frank Hovis.  Awesome!  This is exactly what I did when I decided to properly plan for retirement, with similar results.  I collected data (e.g. historic personal expenditure) and ran it through some Excel based DCF formulae to give a financial plan.  That then told me how much I needed and the risk level I needed which then filtered through into how I constructed my portfolios (asset allocation, etc).  Threw in some sensitivity analysis to get some ranges and I was a contented bunny.  I'm good on the old finance but typical of any specialist (doctor heal thyself), failed to apply it to myself.  Essentially a bit of project lifecycle financial management where the project is my life!  After that, working almost becomes a lifestyle choice, at least in the sense of being able to downsize a bit.     

@Wight Flight.  Apologies.  Slightly off topic (which is a great one and a sign of A1 parenting!).  Another thought might be an investment club (either local or over the web).  Or even set one up at school, possibly with the help of a supportive teacher and/or parent.  BTW, I know many engineers who progressed into some very senior business roles.  Some are just naturals when it comes to finance (many on my accounting courses had engineering degrees and were seen as the most likely to pass).  That blend of engineering and financial acumen is hard to beat.  I also hung out with engineers at Uni, a large number of which were on bursaries (especially the Army) and they were on a solid path (money, job to go to, vacation job, mentoring, etc).    

Top stuff you both!

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Here’s a fun clip for your lad to watch:

Have you got a mutual interest in something that might generate a reward? 

My mate used to go the the local car auction with their elder brother with a strict budget and criteria with the aim of flipping a basic motor for a profit, this is no good for him to do alone but if you have a similar knowledge of something maybe you could put 500 in each and see if you can make a few quid..?

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On 17/08/2019 at 07:27, Wight Flight said:

Thanks. He already knows about compound interest, and books are a non-starter because a) He is 17 and b) He is dyslexic.

An audio book would be an option but youtube would be ideal.

How about an audiobook on YT?

The vid is longer than it took me to read the book. Chapter 1 starts just after 3 minutes:

 

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