Would you start a PP for a 6 year old?

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Matthew19
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Would you start a PP for a 6 year old?

Post by Matthew19 » Thu Apr 30, 2020 2:01 pm

I've got two kids, 5 and 6. I want to start an investment count for each of them. Obviously the PP is conservative, but as they grow it will teach them all of the benefits of predictable returns with low volatility.

Seeing how they may use this money to start a business when they are 15, wouldn't investing in something conservative still make sense?
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Re: Would you start a PP for a 6 year old?

Post by stuper1 » Thu Apr 30, 2020 2:28 pm

Too conservative in my view.

Here's what I might do. 50/25/25 between VTI/VGIT/GLDM.

Rebalance annually and have them participate in the rebalance process so they see how it works. This teaches them to invest in low cost funds, keep an eye on them, and rebalance infrequently.
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mathjak107
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Re: Would you start a PP for a 6 year old?

Post by mathjak107 » Thu Apr 30, 2020 2:34 pm

I would not use the pp if I was totally in my accumulation stage ....I am retired so I use it from time to time with other portfolios
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Hal
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Re: Would you start a PP for a 6 year old?

Post by Hal » Thu Apr 30, 2020 4:26 pm

+1 , too conservative.

Would use something like Belangp's 60/40 Shares/Gold portfolio and use as a teaching tool as per stuper's suggestion
Nothing like physically holding a small gold coin to learn the value of saving. As a child we used to go out gold panning, sure gave me an appreciation of what work was. ;)
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Re: Would you start a PP for a 6 year old?

Post by t-bear52 » Thu Apr 30, 2020 7:38 pm

When my child was age 5 or 6, I set her up Wellesley Fund and 10% gold as Clive and Tex long ago suggested.
I've since switched out the Wellesley for Wellington Fund since she had decades before retirement.
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Re: Would you start a PP for a 6 year old?

Post by dualstow » Thu Apr 30, 2020 8:46 pm

For that age, I would probably buy all stocks or something close to it. I personally would not buy anything more conservative than Wellington, mentioned above ^.
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Kriegsspiel
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Re: Would you start a PP for a 6 year old?

Post by Kriegsspiel » Fri May 01, 2020 7:32 am

I've given my niece and nephew a share of VT for their birthdays, they're 4 and 6. Maybe I'll change what I buy them, but I'll give them the whole thing at 18.
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jhogue
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Re: Would you start a PP for a 6 year old?

Post by jhogue » Fri May 01, 2020 10:20 am

For teenagers and college students (who need a practical class in economics & personal finance):

Take them for a visit to your bank safety deposit box. Show them the following:
-A 1920 double eagle $20 gold coin
-A 2020 American Eagle bullion coin
-$2000 in 2020 paper I-bonds
-$2000 in 2020 Federal Reserve notes

Ask them:
How much are they worth?
How much will they each be worth in 20 years?
How much will they be worth in 100 years?

Which one would they want to own? Why?
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
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Re: Would you start a PP for a 6 year old?

Post by mathjak107 » Fri May 01, 2020 11:18 am

jhogue wrote:
Fri May 01, 2020 10:20 am
For teenagers and college students (who need a practical class in economics & personal finance):

Take them for a visit to your bank safety deposit box. Show them the following:
-A 1920 double eagle $20 gold coin
-A 2020 American Eagle bullion coin
-$2000 in 2020 paper I-bonds
-$2000 in 2020 Federal Reserve notes

Ask them:
How much are they worth?
How much will they each be worth in 20 years?
How much will they be worth in 100 years?

Which one would they want to own? Why?
How about an Apple stock certificate in the mix
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jhogue
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Re: Would you start a PP for a 6 year old?

Post by jhogue » Fri May 01, 2020 11:21 am

Sure. Why not include an Enron share certificate while you are at it?
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
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Re: Would you start a PP for a 6 year old?

Post by Tyler » Fri May 01, 2020 12:12 pm

Matthew19 wrote:
Thu Apr 30, 2020 2:01 pm
I've got two kids, 5 and 6. I want to start an investment count for each of them. Obviously the PP is conservative, but as they grow it will teach them all of the benefits of predictable returns with low volatility.

Seeing how they may use this money to start a business when they are 15, wouldn't investing in something conservative still make sense?
I think it's a great idea.

Encourage them to add their own money over time. Talk to them about buying more of the low assets to keep things balanced. Maybe even find a way to pay them a "dividend" tied to the portfolio to reward responsible investing ideas like consistency over boom/bust cycles. By the time they're ready to invest on their own, they'll be so much better prepared than 99% of kids the same age!

And if the goal is to start a business 10 years later, remember that the stock market has stayed negative for way longer than that in the past. Some sort of simple but consistent AA is definitely still a good idea. Not just for the life lesson but also for the real-world asset protection.
Mechanical engineer, history buff, treasure manager... totally not Ben Gates
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shekels
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Re: Would you start a PP for a 6 year old?

Post by shekels » Fri May 01, 2020 12:38 pm

Matthew19 wrote:
Thu Apr 30, 2020 2:01 pm
I've got two kids, 5 and 6. I want to start an investment count for each of them. Obviously the PP is conservative, but as they grow it will teach them all of the benefits of predictable returns with low volatility.

Seeing how they may use this money to start a business when they are 15, wouldn't investing in something conservative still make sense?
Kids should IMO learn about Investment/ personal finance at a early age.
Just be aware of how the funds are to be distributed when they turn 15 or 18.
You may want to structure the account to benefit them a little later in Life.
How would you feel if they used the Money to buy a car/party/friends.
¯\_(ツ)_/¯
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