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parents and money

Submitted by joewatch on October 1, 2007 - 11:39.

My parents taught me a lot about money, which has helped me get to where I am today. Of course, I've made a lot of mistakes on my own, which helped reinforce some of the lessons.

One of the best things my parents did for me was helped me open up a brokerage account with $10,000 (of their money) when I was 18. They started me off learning how to invest by choosing 4 mutual funds and putting the money into them (Schwab 1000, Barron Asset Fund, two others that I can't remember now.) They also gave me books to read, like Ben Graham's Intelligent Investor and Bill Bernstein's Intelligent Asset Allocator. Basically, it was a gift of $10,000, but the rule was I wasn't allowed to take the money out. I was allowed to make any transactions I wanted. Discussing my investment decisions became something we did (and still do) on a regular basis.

Some of the good things that came out of this:
I learned how to analyze mutual funds as well as stocks.
I learned about the basic risk profiles of different asset classes.
By starting me early, I was prepared and confident to invest my own money, and larger amounts of it, as I got older and earned more.
I was inspired to continue my financial education.
I gained a lot of practical experience with different types of securities, including microcaps and IPOs.

I'm 33 years old and have made over $750k investing my own money in securities at this point. I have never accepted any offers of gifts of money from them since that first $10k (except for a small gift at my wedding.) My parents told me when I was young that rich people don't work hard for their money; they let their money work for them. I'll probably do the same thing for my kids when they are old enough.

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