Investing

My Son Has More Money Than I Do!

Seriously, how is it possible that my short, sweet 11-year-old son, has mas plata que yo?! Sorry, my mind went Mexican on me there for a minute. Probably because I’m craving tacos and a Mexican Coke right now.

I love buying stock. I’ve been doing so for about 10 years now and have done fairly well for myself. I’m totally out of mutual funds now and have created somewhat of my own mutual fund.

If you’re confused about what that is, a mutual fund is simply a compiling of multiple different stocks packaged into small pieces. The idea behind their creation was to somewhat minimize the risks of owning stock in a single company. However, what also takes place and whenever you try to minimize risk, is that you also minimize reward.
When my son was born, I determined that same year, no matter what our financial situation, I would start a fund for his future. Being zero years old, he had the incredible value of time ahead of him. Being the first grandson, I had no problem sharing with all my family members my idea and asked them to get involved with his future. By 6 months old I had started a fund for him with about $750. Not a huge amount of money, but something to begin with.

At first, being very young and very stupid about investing, I simply purchased the only mutual fund I could find that would accept an initial buy-in of less than $1000. It puttered along for months not gaining any ground at all. (This was, by the way and just for point of reference, 2007-2008. I wasn’t going to gain anything anyway with a depression greater than the one of the roaring ‘20’s happening =)

That’s when I decided to change my perspective and buy straight stock. I sold his fund and bought 2 different stocks, a small company called Amazon.com, and a stupid streaming idea called Netflix. I was able to buy two of each with the cash that he had.
Ten years later and he’s gained an eye-popping 1092% of the original investment! I’ll let you play and salivate with the math on that one.

He still only has 2 Amazon. Netflix did a stock split along the way and so he now owns 14 of those and with additional investment that grandma has given along they way, he owns 2 Shopify also.

As other children have come into our family, they too have a fund with their name on it and are plugging away with their own accounts. Each one starting with whatever I could scrape together and whatever other family wanted to invest in their futures also. In fact just a few weeks ago, grandma sent a check with a contribution to each kids account.
I don’t think in terms of days and weeks, I think in terms of years and decades. I believe it’s the best scratch off we have at winning the lottery (which I wrote about, here).

If Austin gets to 21 and the market continues to go well, he’ll graduate college with a cool $27,000–$30,000. If he chooses to also think in terms of years and decades, he’ll have over $2,000,000 by the time his hair is silver and he’s ready to retire, and get this, without adding another penny to that account.

I’ll be honest with you, the reason I made this decision was because of something my parents did for me when I was a teen. My dad told me when I was 16 that I had a fund in my name with several thousand dollars in it. I was elated and felt so loved. I’ve never touched that money. It has provided the basis for my own retirement account.

My thought was, when my son was born, that if that made such an impression on me when I was 16, I should make the same effort with my kids when they are the same age, and so we began.

What about you? What are your thoughts about your kid’s long-term?
Maybe you’ve not had a long-term thought and this is new to you. Not a problem! The best day to start…just happens to be today!
Well, how can I help? What questions might you have that I can provide some direction with?

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