Ibrahim

Interested in: Business Strategy & Transformation, psychology, entrepreneurship, and world economics

[Brian Withers @StocksWithBrian]

My kids will be millionaires by the time they are 40.

Here's how:

In 2004, when I was 37 years old, I realized the power of investing was all about time in the market. It hit me like a ton of bricks that I had waited so long to get going.

So, I decided to give my two boys a 30-year head start.

That summer, I sat down with my two boys (ages 5 & 7) and an 11" x 17" piece of construction paper. I split it into 6 sections and placed pictures or items representing 6 companies.

I gave them each a number of pennies and asked them to place more pennies on the businesses they liked the best. They picked:

▪️ Dell
▪️ Pixar
▪️ EA Sports
▪️ 4Kids Entertainment

For each penny, I invested $100 in the stocks they chose in a UGMA account for each of them.

And then I waited until next summer.

In the summer of 2005, I reminded them about the "pennies" exercise. But this time, I asked them to pick companies they were familiar with.

I got eye rolls and a little pushback. But it didn't take too long, and I could keep their attention for a few minutes.

They suggested:

▪️ eBay
▪️ Target
▪️ Gamestop
▪️ Outback Steakhouse
▪️ Nintendo

So we did the thing with the construction paper and pennies again. I invested $100 for every penny into each kid's account based on their decisions.

Every summer after that, I repeated the process.

As they got older, I got them more involved in the process.

They would pick stocks from the summer edition of the Motley Fool Stock Advisor, where all the service's stocks were reviewed.

We used a spreadsheet to "split up" the investment based on current stock prices.

After a couple of years, I shared the account balances with them so that they wouldn't select stocks that were already more than 10% of the portfolio.

I showed them how to place limit orders and buy the number of shares they wanted.

The decisions were always theirs, regardless of how I felt about the stocks.

I remember 2010 specifically. I was selling Netflix, but the kids wanted to buy shares. I let them.

At one point, those shares they bought that year turned into 40-baggers.

We rarely sold.

I used their returns to show them the power of long-term buy and hold.

When one of the stocks had a great day or was a double from when they originally purchased. I let them know.

They picked some great companies that have done amazingly well.

▪️ Amazon
▪️ Netflix
▪️ Tesla
▪️ Chipotle
▪️ Google

And some that have bombed:

▪️ 4Kids Entertainment went to zero
▪️ Nintendo and Gamestop shares were sold at a loss
▪️ Sony and Outback Steakhouse went nowhere

Now my "kids" are 24 & 26.

Unlike me, they have become extremely patient investors and rarely check their portfolios.

We stopped funding their account once college came around and left the stocks to grow in the background.

Their results have been amazing.

The best part is that they really "get" the benefits of buying and holding stocks for the long term.

This exercise has helped me be a better investor, and I've passed the bug on to my kids. Probably my best investment ever!

Because they graduated high school with a sizable nest egg, they have a massive headstart over their peers.
These investments and the LTBH habits they've built could make them millionaires before they are 40.

That's a wrap!

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⬇️TL;DR summary ⬇️

Keys to investing with your kids:

▪️ Don't wait until they are "old enough"

▪️ You don't have to invest a lot; the key is consistency
▪️ Let them make their own decisions
▪️ Mistakes are a great learning tool
▪️ Have fun with it!

Love to hear about your experience or questions.

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Actions—or the flow of time and money—reveal what a person is far better than words.

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https://t.co/VRD4f0BNOk

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