In school our kids are taught a lot of subjects, but financial literacy is not one of them. What is the value of money? What is the time value of money? What is the difference between simple and compound interest? The teaching of financial literacy, like morality or patriotism, is a parental responsibility. How are we doing? Surveys show most Americans live paycheck-to-paycheck and do not have enough money on hand to cover even a $400 emergency.
Recently I was in the middle of a business lunch meeting when a young restaurant employee approached the table. He had overhead me discussing investing concepts. He was intrigued by the pie charts, etc. and wanted to know more. I was inspired by his sincerity and hunger to learn. “Here’s my card. Call me.”
Will He Call Me?
I hope he calls me because I genuinely want to help him. I would start by laying the foundation of why it is important to defer consumption today to save and invest for the future. Anyone can do this. You can get started with any dollar amount. Let us assume you contribute $100/mos and earn a compounded return of 7%/yr. After 20 years you would have over $50,000!
I would also explain to him the role of capital markets. Stock markets exist to match companies needing to raise capital through the issuance of stock (equity) with investors (owners). Similarly, bond markets match borrowers needing to raise debt capital with investors (lenders) desiring interest income. US capital markets are the best regulated and most liquid in the world.
Make Money While You Sleep!
Investing is a key to financial independence. You can make money while you sleep! Unfortunately, many think the stock market is a casino, and investing is gambling. Why? Because no one has taught them otherwise.
FYI, if you are a Louisiana resident aged fifty-five and older, you can take college courses from Louisiana public universities tuition free. How about an investment class?
About the Author
Bill McCollum is an investment advisor representative with Eagle Financial, a Wealthcare company. Investment advice offered through Wealthcare Advisory Partners, LLC, (“WCAP”). WCAP is a Registered Investment Advisor with the U.S. Securities and Exchange Commission. Investing involves risk, including potential loss of principal involved. Past performance is not a reliable indicator of future results. Not all strategies are suitable for all investors.