I have been asked by a young person about investing and it occurred to me that many young people could benefit from my expertise in the subject. Before I get to the meat and potatoes let’s have a good look at your life and what goals you should be striving for. To begin the odds are pretty high that your parents have completely screwed up your families legacy. They probably divorced or wasted their lives with other pursuits throwing you to the wolves and expecting you to “make it on your own.” I doubt any of you are expecting any kind of inheritance in fact I suspect for most of you your parents will become a burden to you as they get old and/or pass away leaving you with the bill for their lack of vision.
What should your goals be? First of all you don’t want to be a burden on your own children so you’ll want to prepare for the day when you can no longer work. Don’t kid yourself into believing you can work until you are 65 or 70 because very few people make it that far. In all likelihood you’ll end up with a minor or major stroke, heart problems, cancer or some other illness or accident that will take you out of the job market long before social security kicks in and even if you make it to 65 you’re just kidding yourself if you think you can live on that unless you develop a craving for canned dog and cat food. Aside from preparing yourself for your last day of work you’ll also want to get a life insurance policy so your kids won’t have to dish out their own money to plant you in the ground. And finally you’ll want to build a family legacy by leaving something tangible behind for your child for them to build on.
One more thing before we continue. Investing is gambling plain and simple. There are no guarantees, people win and people lose and most people lose more than they win just like in Vegas or Atlantic City. Even the big players lose lots of money none of which is tax deductible. The government always wants a piece of your action but doesn’t want to share in your risk. Just like a trophy wife.
My best advice to young people requires an incredible amount of discipline and vision. The best investment you can make is something called annuities. Annuities pay something called dividends which means that quarterly, or every six months or yearly you can expect a check representing your share of the profits that the company made during those periods. You can get them through any stock broker or even your homeowners insurance agent. Most home insurance agents are also annuity brokers. The beauty of annuities is that they do not depend 100% on whether your stocks go up or down or not. Yes stock movement will affect your income potential but there is an old saying in the stock business, “you haven’t lost until you sell” and there is no reason to ever sell your annuities. Buy the stocks of products you like, coke, beer, tractors, whatever.
What you will need to do to begin is decide how much money you want to spend each month on purchasing these stocks and stick to that program no matter what. Additionally every time you get a dividend check you’ll want to add that to the kitty of what you are already spending. At first what you invest will be relatively small but as you continue to buy more annuities and adding to the pot with your profits after a few years you’ll be buying more and more each year. If you manage to continue doing this until you are no longer capable of working anymore you’ll live comfortably with a guarantee of some kind of income as long as you resist the urge to touch any of your stock or put less in the pot each year that you originally decided to put aside. In fact as you claw your way up the economic ladder your minimal investment should increase not remain the same.
Now just because your parents screwed up with you doesn’t mean you have to screw up with your kids. Family is about building a legacy and odds are you’ll be the one who will have to start that ball rolling. You need to leave something behind for your children to build upon and annuities are the perfect vehicle for that. Bear in mind you will have to teach them about these stocks, building your families legacy, adding their own money to the annuity pot, and not ever touching what has been purchased other than the income they generate and only then once they have retired.
Doing what I have recommended here will ensure that your children and grandchildren will succeed in the financial world and that you won’t be pushing a shopping cart full of your belongings while eating Meow Mix when you get old. Start now. Start today. It is never too soon.