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Investment fund for children?

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  1. #11

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    This is just my opinion but I also think it is important that while teaching them to be financially savvy you also teach them that money is not the most important thing in life and to help others less fortunate than you.

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  2. #12

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    Quote Originally Posted by cendrillon:
    Doesn't it. Any thoughts on how to teach risk tolerance?

    To me risk tolerance and frugality are the keys to being in a good financial position, and in that order. I have spendy friends who take risks and they're in a much better financial situation than the risk averse ones who are frugal.
    I go with Albert Einstein, compound interest is the 8th wonder of the world. The earlier children are taught about it, and the impact of risk, the better.

    I started with explaining compound interest to the 13 year-old, then added in levels of risk represented by higher interest rates. Finally, to get over the natural inclination to go for the highest interest rate, we added in a probablity of loss to each interest rate. Using the balance in her bank account that her allowance is deposited into each month in the exapmples got her very interested I think.

    In addition, we looked at her child trust fund from the UK, how that had grown and what happened to it in the financial crisis (UK government gave all children £250 when she was born & parents could add to it up to £1200 initially, then it was raised to £3600, interest is tax free and it is accessible when she turns 18).

    Admittedly it all got a bit complicated at the end, with risk levels over time ending up being quite a factor for her, she did favour taking more risk because she is young and can make it back. It was a great conversation to have over a few weeks for teenagers, she could see that not spending her allowance had a huge impact in future years. She now has a plan to follow and has started with a parcel of 2800.

    One thing I don't think is good is having a cash card for her bank account. She has a savings book, and must go into the bank to take any money out. To date she hasn't done it once, although we have shown her how. An atm card is instant gratification without having to think about the consequences.
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  3. #13

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    Quote Originally Posted by hullexile:
    This is just my opinion but I also think it is important that while teaching them to be financially savvy you also teach them that money is not the most important thing in life and to help others less fortunate than you.
    I agree with this but while teaching them those things it's also good to teach them to study hard, eat well, get enough sleep, be good to their parents, teachers and friends, express their creativity, stand up for their convictions and lots of other stuff that's totally unrelated to money besides.

    I think that people often make false dichotomies here. People say things like I'd rather be poor and help the less fortunate than rich and selfish. To that I say I'd rather be rich and help the less fortunate than poor and selfish. Feel free the substitute helping the needy with being healthy, having good friends, a loving family, being a good person or anything else that is completely orthogonal to how much money you have.

    The reason I mention this is because underlying these kinds of statements is some kind of Catholic derived guilt at having money, or implication that having money is only possible through immoral means.

    Imagine if this thread was about teaching kids to be healthy. Would anyone say we should remember to teach them that health is not the most important thing in life and to help others less fortunate than them?
    Last edited by cendrillon; 17-12-2017 at 02:21 PM.
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  4. #14

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    I think the question pin posed was not about teaching children financial planning, but rather preparing to have assets, particularly for their future education. My two cents: save a hell of a lot of money for education. I think it's relatively "easy" to get accepted into the world's top universities for master's or PhDs, but not with funding/scholarships, and that's $30,000USD/year in fees, but well worth it for where it gets them in life. OR teach them a foreign language from a very young age of an EU country that has free university fees. Even if they get their fees sorted, there will be living expenses, and in my opinion it's better for them to know their rent and food is covered and they are free to focus on their studies and education. It also sends a clear message to them that you as a parent value your their education.

    I do think, though, that teaching kids to have money is not one of the most important lessons in life. Even education and preparing them to be well-suited to get good office job is also not even a great reality...

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  5. #15

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    Quote Originally Posted by Elegiaque:
    I think the question pin posed was not about teaching children financial planning, but rather preparing to have assets, particularly for their future education. My two cents: save a hell of a lot of money for education. I think it's relatively "easy" to get accepted into the world's top universities for master's or PhDs, but not with funding/scholarships, and that's $30,000USD/year in fees, but well worth it for where it gets them in life. OR teach them a foreign language from a very young age of an EU country that has free university fees. Even if they get their fees sorted, there will be living expenses, and in my opinion it's better for them to know their rent and food is covered and they are free to focus on their studies and education. It also sends a clear message to them that you as a parent value your their education.

    I do think, though, that teaching kids to have money is not one of the most important lessons in life. Even education and preparing them to be well-suited to get good office job is also not even a great reality...
    Both my parents have bad money skills. I had a very stressful life from 17 till 25 as a result of the poor skills I inherited from them until I learnt how to manage my own money properly. Life would have been much better if I'd had simple life skills like sticking to a budget and having an emergency cash reserve.

    There are many people in the US in particular with huge amounts of consumer debt and no retirement savings that suffer significantly because of poor money skills. Financial stress is also one of the main causes of divorce.

    I think it's a really important life skills to pass on to your kids, together with other stuff like being healthy, hard work, self discipline etc.

  6. #16

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    Quote Originally Posted by cendrillon:
    I agree with this but while teaching them those things it's also good to teach them to study hard, eat well, get enough sleep, be good to their parents, teachers and friends, express their creativity, stand up for their convictions and lots of other stuff that's totally unrelated to money besides.

    I think that people often make false dichotomies here. People say things like I'd rather be poor and help the less fortunate than rich and selfish. To that I say I'd rather be rich and help the less fortunate than poor and selfish. Feel free the substitute helping the needy with being healthy, having good friends, a loving family, being a good person or anything else that is completely orthogonal to how much money you have.

    The reason I mention this is because underlying these kinds of statements is some kind of Catholic derived guilt at having money, or implication that having money is only possible through immoral means.

    Imagine if this thread was about teaching kids to be healthy. Would anyone say we should remember to teach them that health is not the most important thing in life and to help others less fortunate than them?
    Well I am not a Catholic and don't believe money is only obtained by immoral means. I am not anti-rich, in fact I admire those who built their wealth. Similarly I do not believe generally that people are poor because they are lazy, reckless or stupid.

    I said what I said because there are people, and this not aimed at anyone here, who view money as the main goal in life. For me it is not (but it helps ).

    P.S. My wife and I will be spending some of Christmas giving out food to the poor thanks mostly to a donor from this site. If anyone wants to also donate send me a message.

  7. #17

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    Quote Originally Posted by hullexile:
    Well I am not a Catholic and don't believe money is only obtained by immoral means. I am not anti-rich, in fact I admire those who built their wealth. Similarly I do not believe generally that people are poor because they are lazy, reckless or stupid.

    I said what I said because there are people, and this not aimed at anyone here, who view money as the main goal in life. For me it is not (but it helps ).

    P.S. My wife and I will be spending some of Christmas giving out food to the poor thanks mostly to a donor from this site. If anyone wants to also donate send me a message.
    Yeah, this is not meant to be directed at you. Just that I notice as a society whenever money is discussed people feel a need to talk about helping others being more important or that money is not the most important thing etc. As if people need to be reminded of these things.

    It's funny that we don't do the same thing when people discuss other things in life like love, health, studying etc. Does anyone in real life really believe money is the most important thing in life or is this just a caricature of the wealthy?

  8. #18

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    Quote Originally Posted by cendrillon:
    Yeah, this is not meant to be directed at you. Just that I notice as a society whenever money is discussed people feel a need to talk about helping others being more important or that money is not the most important thing etc. As if people need to be reminded of these things.

    It's funny that we don't do the same thing when people discuss other things in life like love, health, studying etc. Does anyone in real life really believe money is the most important thing in life or is this just a caricature of the wealthy?
    Love and health are probably the two most important things in life. Most people would not swap money for those.

    Yes sadly I think there are a lot of people who put money at the top just look at the number of people killed for money, or the families destroyed through fraud or even thise working 26 hours a day so they can afford a very expensive sports car to crawl around the streets of Hong Kong then wonder why they have no relationship with their kids. Of course the sensible ones earn their money then take early retirement
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  9. #19

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    Quote Originally Posted by hullexile:
    Love and health are probably the two most important things in life. Most people would not swap money for those.

    Yes sadly I think there are a lot of people who put money at the top just look at the number of people killed for money, or the families destroyed through fraud or even thise working 26 hours a day so they can afford a very expensive sports car to crawl around the streets of Hong Kong then wonder why they have no relationship with their kids. Of course the sensible ones earn their money then take early retirement
    My point wasn't health versus money. My point is that nobody says 'health isn't everything make sure you help the less fortunate' when people are discussing fitness, or 'friendships aren't everything, make sure you help the less fortunate' when people discuss relationships or making new friends. We do this with money though as though to imply that paying attention to money somehow precludes one from helping others.

    Killers are an extreme case, I'd argue they actually covet power over others and not money. I'd also say that the types you mention who have expensive sports cars aren't going to have much relationship with their kid anyway, sports car or not. I'd also argue that if they really cared about money they wouldn't have a sports car

    Anyway, on the topic of teaching kids life skills, like health, self discipline, knowledge and relationship skills I think that having financial skills helps one achieve a lot of freedom and self determination in life which is really important. Ideally it will mean that my children will be able to spend more time with their children and helping others than they would be able to if they had to work crazy hours to make up for poor financial skills and choices.
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  10. #20

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    An interesting read - key take away for me somewhere down the middle is the usual thing I've said on here, plan enough to make sure the kids get away without loans and hopefully a roof over their heads and debt free.

    Millennials Are Screwed - The Huffington Post

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