So, look. I’m probably not the average bloke.
I don’t reckon I’m too far off it, to be fair. But I’m not in the dead centre.
In the ‘for’ column, I did identify strongly with a recent Betoota Advocate story about a dad who got a little too excited clearing a weekend to reorganise the garage.
(Mine is, well, still a work in progress.)
In the ‘against’ column? The best part of my weekend was when my two nephews wanted to chat to me about… investing.
That’s probably not typical.
To be fair, we’d just been around the pool, and had been kicking and passing a footy, so it’s not like I was sitting in the corner in my green eyeshade waiting for them to come and chat.
But, toward the end of the afternoon, one of them wandered over.
“So, how can I start investing, Uncle Scott?”
It’s not quite ‘you’ve won lotto’ or ‘here’s a new car’.
But, to be fair, it felt pretty close.
Not (just) because investing is one of my favourite things, but because my nephews, in their mid-teens, might hopefully be about to set themselves up for a lifetime of financial success.
One of them had a (small) wad of cash he’d saved.
The other wants to put a set percentage of each paycheque away to invest.
These are smart kids. With their heads screwed on. And with great parents.
Now, lots of stuff can get in the way, of course. There’s no shortage of stuff to spend money on when you’re a teenager.
And the list gets longer once you start driving.
But they’re off to a great start.
I started to explain investing to them.
Some of it made sense. I’m going to have to work harder on the rest.
Not because they’re silly. They’re not — they’re both smart kids, as I said.
But because I had to remember what it was like to be that age.
I vividly remember my old man’s 40th, when I was about 13.
I couldn’t believe someone could get to that age, let alone imagine myself in his place.
It was… old!
And all these years later?
Well, I can almost still see my 40th in the rear vision mirror.
If I squint.
So when you try to talk to kids about compounding, over decades… it’s no surprise they struggle to comprehend that sort of time passing, let alone have the self-discipline to set their sights on it.
Truth be told, I don’t have a good solution for it yet.
My fall-back is to ask them to trust me, and hope I have enough credibility with them that they’ll try hard to do just that.
It seemed to work. At least in that moment.
But then I had an idea.
My old go-to.
The Vanguard index chart.
I was going to download it and get them to print it.
(My older nephew had a better idea. He just connected my phone to their home network and printed it for me. Oh dear.)
Then I showed it to them.
“I know 1991 was a long time ago — 30 years — but imagine if you’d invested $10,000 back then”
(Neither was alive, of course, but they seemed to be prepared to imagine it.)
I scrolled to the right hand side of the chart.
“Two hundred thousand dollars!?!?” one of them exclaimed
Their eyes lit up.
I had their attention.
We went on to chat about how they might get started, that it’s sometimes volatile…
“But you end up with $200,000!” he said, again.
“Well, there aren’t any guarantees, mate”, I reminded him, “but that’s what would have happened over the last 30 years”
I printed out two copies, one for each of them.
“Now, we’ll chat more about getting started next week” I told them.
“In the meantime, can you do me a favour?”
No objections, so I went on.
“Can you grab some blu-tack from Mum and Dad and put this somewhere in your room, so that you’ll see it every day?”
They agreed, and off they went.
Then one of them came back.
“Can I have another copy?”
I printed out another one.
Then he showed us where he’d stuck it — on the wall at the bottom of the internal stairwell, so they’ll see it every time they walk downstairs from their bedrooms.
I went home with a smile on my face.
We’d had a wonderful day together, which would have been more than enough.
But that ending really topped it off.
Today’s only Day Two, of course.
No promises, no guarantees.
And it won’t be perfect.
Maybe life gets in the way.
Maybe the desire for that ‘thing’ they want will sometimes overwhelm their desire to invest.
And that’s okay.
We’re not aiming for perfection.
I’m just trying to help them do two things:
1. Recognise the power of long-term compounding; and
2. Develop some habits (and some ‘pre-commitment’ tools) to help them stick with it.
If they don’t?
That’s okay. There are many more important things in life than investing.
And any successes will be theirs, while any missteps will be mine. That bit is up to me.
As I said, they’re smart kids.
They’re sensible kids.
They’ve got bright futures ahead of them.
(So has their younger sister, my niece. She’s not quite ready, yet, but she’s on my investing radar, too.)
But I hope the ongoing conversation, aided by that chart, will smoothe their path somewhat.
And, if you have young people in your life, I hope it’ll help them, too.
Print out that chart.
Whack it on the fridge.
Let them absorb it by osmosis.
See, I can still recall the words on a bickie tin that was originally my grandmothers, and sat on top of our fridge when I was a kid: “And I oft have heard defended, little said is soonest mended”.
Why do I remember it?
Mum and Dad never mentioned it, or referenced it. I doubt they had any intention of us learning from or remembering it.
But it was there. And, just by casual osmosis, I still remember it decades later.
I reckon there’s a good chance that the lessons from that one simple piece of A4 paper (packed with lots of detail) is the picture that paints the proverbial 1,000 words.
(A word count, coincidentally, I’ve literally just passed in this missive. Which is probably as good a reason as any to stop.)
But, do me a favour.
Please talk to your kids, nieces and nephews, grandkids and the other young people in your life.
Don’t tell ‘em why they should.
Show ‘em, instead.
You might just change their financial lives.
(Oh, and one of the best ways to learn something is by teaching. You’ll probably help yourself, too!)