Sunday, April 14, 2013


I was trying to explain dividend investing to a high school kid I
work with this past week.  I told him about the new portfolio
I’d set up to rebuild my IRA and my taxable account.  I
explained compounding to him and how someone of his age
would benefit greatly by starting an account at 18 and
re-investing all dividends.  He would probably either be retired
by my age or earlier if he starts while he’s young.

He didn’t understand why everyone wasn’t doing it, if it was
seemingly so easy to set up a dividend portfolio and build
wealth so easily.  The part he didn’t get was that not everyone
knows how to get started and a lot of people simply lack the
motivation and will power it takes to set the money aside for
investing and leave it there.  Life happens, like the 3 heart
attacks I’ve had, which can leave you broke or in debt and you
have to start over.

In this kid’s case, he’s very disciplined as far as saving.  In the
two years he’s worked with me, he’s saved over $10,000, which
I think is impressive enough for anyone at such a low paying
job.  However, it’s especially impressive when you consider he
was only 16 when he started.  He’s a senior in high school now
and plans on going on to college in the fall and I’m sure
whatever he decides to do, he’ll do quite well.  His parents
chose to home school their children and they’ve done an
excellent job.  Whether he’ll decide to take my advice on
investing or not is anybody’s guess.  I just wanted to peak his
curiousity and perhaps he’ll use it to his advantage somewhere
along the way.

Several of the high school kids I worked with
back in the mid 90’s took advantage of my advice.  I recently
ran in to one of them.  He and his wife both worked with me
back when they were in high school before they were married.
I got them interested in DRIP investing and helped them set up
accounts with a few good companies.  I asked him if he still
owned his stock.  He said yes he still owned the original stocks
and still participated in the DRIP programs, but he’d also
recently added more shares to his investments and has done
quite well over the years.  I know that most of their success has
been from their own hard work, but it makes me feel good that
some of my advice has helped them along the way.

The thing I really try to stress to young people is the power of compounding.  At such an early age a person can start with such a small amount and with years of compounding, end up quite wealthy.  Like Judge Joe Brown says on his show, "Pay attention, and you just might learn something."

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