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by wastedbrains
5349 days ago
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That is a great story. Shorter and simpler after mowing the lawn one dad. I told my dad I wanted to invest in stocks. He thought this was a great opportunity to teach me about money. So he loaned me money to invest in the stock market. Help me pick and buy stocks, track their values. Eventually to sell them and pay back the loan keeping profits for myself... The only real issue was it was the start of tech bubble and I was a computer nerd. I bought all tech stocks which soared, my older brother buy shoe companies and the like... I nearly tripled my investment while my brother lost 30ish% of his. Not sure it was quite as real world learning opportunity as he was hoping. |
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The time value of money is significant to a kid. Consider a kid with, say, $500 from babysitting or lawn-mowing. This could buy the kid, say, a really nice bicycle (+ helmet, lock, rack, basket, chain lubricant, etc. Assume they're old enough that they won't outgrow it for a while.) Alternatively, the kid could wait a year and expect to have an extra $20 (given the 4% annualized inflation-adjusted return on the market - what, you're investing, right? not gambling? then you get 4%. :P)
Which would you choose: about $20, or a year with a bicycle? Opportunity cost! And the $20 will just about cover the commission on trading. Ouch. Transaction fees.
The reason that the stock market is attractive to adults is that we generally have an adequate supply of Things that we need to make use of our time. There isn't another object we can spend $500 that will make that sort of an impact on our lives. Diminishing returns!
(Also, we have tens of thousands of dollars, so we can invest without being slaughtered with fees.)