I had a Zoom call with my niece a few weeks ago. She saved up a little bit of money and was ready to invest it. It was so much fun to explain to her how investing works. She’s 10, so the main point was that she can buy ownership in companies. I think she really liked that:
- Everyday thousands of people are going to work to earn money for her.
- Every time someone goes to McDonalds, buys a Hershey bar, or buys something on Amazon, she makes money.
It will be a few more years before I explain how to pick wise investments (she’s off to a good start with mostly index funds). For now, the key is to get her started. Compounding returns are powerful. Most of the reason Warren Buffett is so successful is because he’s compounded returns for 80 years (credit to Morgan Housel and his The Psychology of Money for pointing that out to me). Warren started at age 10 too. He would have been successful either way, but a long time-period got him to $80 billion+.
Low investment minimums and fractional share trading make investing attainable for young family members. Get them started early. They too can wake up every morning knowing people are going to work for them.
About the Author: John O’Connor
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