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x-post from Consider starting your teenager in a Mutual Fund

February 2nd, 2007 at 09:01 am

Lots of people open children's savings accounts to help teach their kids about saving, but how many teach their kids about investing from an early age?

When I was 13, my dad made a career change to become a stockbroker. After going through his training, he decided he wanted my brother and I to each have a mutual fund. My parents contributed the minimum amount to purchase American Mutual Fund for each of us ($250 -- still the minimum today!). In the early years, he encouraged us to put money we received as presents and for good grades into the fund. When I worked as a waitress in high school, I often saved part of my tips and wages and put it in the fund (not all of it, I was a teenager after all!) By the time I graduated from high school, the fund was worth $3,970. When I graduated from college, it was worth $7,494.

Here's a summary of my contributions from age 13 to 22:
1984 250
1985 150
1986 2,036 (I think 1,000 of this was transferred from my saving acct.)
1987 614
1988 0
1989 310 -- HS graduation
1990 150
1991 200
1992 0
1993 550 -- college graduation
total: 4,260

I briefly considered cashing out some of the shares after graduation to fund a roadtrip around the US, but my parents discouraged cashing it in. Luckily I had enough cash on hand from summer jobs to take the trip.

After I got my first real job, my dad often encouraged me to contribute $50 to the fund every month. There were a couple years I was pretty good about doing this, but mostly I just got busy and forgot. I wish I'd known about setting up automatic deductions from my checking acct back in 1993!

I'm missing some of my records, but I think I contributed around 300-600 every year from 1194-1998. I don't think I've added to this particular fund since 2001, when it was worth $27,115. Today it's worth $38,496.

In hindsight, I didn't learn much about choosing investments from this experience, but having the fund and being encouraged to contribute to it regularly went a long way in impressing the importance of saving and investing in my mind. Plus I have a big chunk of cash that I would not have had otherwise. Smile

So I would urge all of you who have teenagers to scrounge up $250, and consider starting their investing education today.

2 Responses to “x-post from Consider starting your teenager in a Mutual Fund”

  1. Broken Arrow Says:

    That's a cool dad you have. Smile

  2. Homebody Says:

    That is the plan for my grandchildren. No massive presents for them, all going into a mutual fund. Of course I have no grandchildren yet, but that is the plan.

    When my middle daughter was 12 I bought her some Disney stock, it has since split twice, but she is still a very conservative investor.

    Good for your dad and I second your advice!

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