My son,Â ZanderÂ (6yrs old) asked me this morning about Google Finance. Â He isÂ fascinatedÂ by theÂ InternetÂ and often watches over my shoulder while I’m surfing/working/etc (sidenoteÂ for Dad’s – they are ALWAYS watching you on theÂ internetÂ – keep that in mind!). Â When he asked what Google Finance was, I replied “this is an investment website, son. Â I’ll explain it to you when you are older.”
Then I thought about that. Â ZanderÂ seemed to accept that answer, but it bugged me. Â When did my parents tell me about investments? Â I don’t recall ever being taught about investments. Â I don’t recall ever being taught about savings either. Â I’m not saying there was never a conversation, only that it wasn’t part of the culture growing up. Â I want savings, investment, and financial planning to be part of the culture for my children so they aren’t living paycheck to paycheck when they get older.
I decided that 6 years old isn’t too young to learn about investing. Â IÂ explainedÂ that companies need money to grow the business. Â I went on to explain that the graphZanderÂ asked about was showing the price over time, that the low points were where the price was lower and the higher points was a higher price. Â He listened and even asked questions, like “why do people buy shares”. Â I showed him that over time the value of a stock can go up significantly. Â As an example I told himÂ “If my parents had purchased 10 shares of IBM when I was born, they would have paid just under $200” (history on Google only goes back to 1978, but close enough).
“The stock has split three times since then, once as a 4:1 split, and twice more in a 2:1 split.” I went on. Â “So today, I would have 160 shares for those same 10 shares [10 x 4 = 40 x 2 = 80 x 2 = 160]. Â AtÂ todaysÂ price,Â thatsÂ about $20k.”
Then it hit me. Â If my parents had invested $200 in 1978 for me, I would have $20k today! Â Well… wait, I thought what about inflation. Â I mean, maybe $200 in 1978 was $20k in today money. Â So I checked using an onlineÂ inflation calculator – and it turns out that $200 in 1978 would be about $650.47 today. Â I get that $650.47 isn’t a small amount of money – but it ain’t $20k either! [the use of slang here is intentional for emphasis].
ZanderÂ asked, “why don’t you ask them to buy it for you now daddy.” — kids areÂ sooooÂ cute, right?
“Zander, its too late now”
“But you always tell me its never too late for me”
“That’s true,” IÂ chuckled “but that was 32 years ago.”
ZanderÂ was quiet for a second, then responded very matter of fact “Won’t you live another 32 years?”
Uh… yeah. Â I hope to. Â Wow… out of the mouth of kids. Â So… my goal over the next couple of years is to start investment accounts for all three of my children with no less than $650.47 in them.