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Decades ago when I was teaching high school age kids I used to try to instill some ideas & perspectives that might pay off later. Of course they know everything, but I had an approach to getting them to accept someone older & with more life experience might have something of value for them to consider. I'd ask them at what age they became aware they weren't a little kid anymore. Most of them would say maybe 12 to 14. I'd comment that was about right, so awareness wise how old did that make them? Of course the answer was three, maybe five years. Then I'd point out how much their awareness had developed during that three to five years, which they would realize was a lot. Then I'd point out how old adults were relative to them and how much their awareness must be in comparison (in most cases). Then I'd let them know whatever advice I gave them was optional, & they could take it or leave it or think about it later on. I think that approach served several well. At least those who came back over the years to say hello seemed to indicate that. My idea for them was life would get messy as it does for everybody, but to keep in mind some of the worthwhile things older people had said.
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Anyone seen The Score? Our conversations remind me of that scene where old criminal Robert DeNiro tells young criminal Edward Norton to make a list of what he wants and plan on spending 20 years acquiring the items, and Norton's character scoffs. :cool: |
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Hookers and blow.
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There are no hypothetical financial questions if you manage your money well. Zippy. The math always pencils out. It simply does.
There is no more powerful metric than compound interest over time. One, as Tabs would aver, needs discipline and a readiness to build a nest before taking risks. As an Ensign in 1984, I put $200 a month into a USSA growth fund. Still do. Amazing return... See below, no better advice. The 'marry well' portion of the post is penultimate. Do that and win. Quote:
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If he has no real expenses, put 20% away into mutual funds that return well. When he gets enough to buy property, get into real estate.
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If I could go back and talk to 18 year old me, I would tell him don't ever, EVER, get into real estate, at least not residential.
I know it's mostly California, but the scum bag tenants, laws, court system, etc don't even come close to making it worth it. Sure, you might end up a millionaire when you retire, but the years and years of putting up with evictions, sob stories about non payment, lies, cheats, stress, problems will mean you probably won't live to enjoy it if you can even remember what joy is at that point. Maybe commercial real estate, even with the much higher cost of entry, but more likely just invest in dividend growth stocks. |
max legal limit for 401k and Roth starting the next pay period, or as close as he can get.
He should be able to live easily on ~1000 / month with free housing. He may be a dumb kid but if he is truly focused and ambitious on being an entrepreneur he will probably pull it off after a few hard lessons. |
Obviously, I don't know this Kid at all, but if he has that get rich quick mindset it might be a good time to let him invest in some get rich scheme.
If he follows the wise choice now but sees returns that fall short of his expectations, later when you're not there to guide him, he'll decide to try the get rich quick scheme with more money. Some lessons have to be learned the hard way. I also don't know what business he's in, but using his money to further his education is probably the best thing he could invest in. |
The real money I've made over the last 30+ years was in real estate. Single family rentals, small apt building.
I had a cousin who graduated in the 70's with a Masters in Psychology. Unable to find a decent job, he started buying run down homes, lived in them while he fixed them up and over the years built a small fortune. Admittedly he was a bit unusual and died before he should have :-) Pig Collection Strictly For Snout-Hearted | The Spokesman-Review I'd buy a duplex that needs some cosmetic stuff, live in half, rent the other out. When it's in good shape and you can afford another, repeat. |
I meet so many people (young-old) who ask me for advice as soon as they hear what I do for a profession. When you tell them that its not the "get rich quick" scheme they had in mind, it all goes right out of the window...
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That being said, I would think that very few guys his age would have the necessary focus and discipline to see a plan like that thru. "I wants to be rich...I've got until the weekend though....so there's really no rush." I think this pretty much sums up your average 19-year old's mindset when it comes to finances. |
The best investment ? -- himself.
Still living at home with no kids - take his five grand and get his next level degree. It'll take more than five grand but he's working with little or no overhead. Turn that $30K income in 60 - 80 pretty darn quick. |
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