Not teaching your children to INVEST makes you a Bad Parent? I personally think it does, but is it your fault if you haven't?

Firstly, If you've opened this article, it's for one of 2 reasons:

A - You agree and are curious about what I have to say or

B - You are really annoyed by my judgement and I may have angered a few parents here who feel they are lectured plenty, about how to raise their kids. Probably by parents or relatives, who didn't set them up to be an investor and the vicious circle continues.

But I am not trying to judge, just comment on the reasons why you may have failed to set up your bundle of joy to thrive financially, and maybe what you can do to start them off.

I read an excellent book The Psychology of Money: Timeless Lessons on Wealth, greed, and Happiness by Morgan Housel and within the first 13 pages hit home why we act the way we act financially...

"A 2006 economics study by Ulrike Malmenduier and Stefan Nagel went through 50 years of data. On how Americans use their money and what they do with it. It found people's lifetime investment decisions are heavily anchored to those investors had in their own generation - In early adult life"

So if you grew up in a high-interest market (the '70s, the '80s and '90s) your parents wouldn't have invested at all, they were busy paying down mortgages quickly to avoid high-interest payments (16%+). They also had great pension schemes (Defined benefits) so didn't need to invest for their retirement.

You then had the Dot Com bust in 2001-2003 and then the Financial crisis in 2007-2009 to contend with. Hardly a conducive environment to invest and make money. But if you had bought in Peak Dot Com you would have made 224% and Peak Financial Crisis 187% by just holding a S&P 500 Fund.

Investing was "for the rich", you had to call a broker and it was "Seen" as complicated and seemed a closed shop. Your parents probably didn't have the means or method to invest, it also had expensive commission fees and lacked transparency for those uninformed investors.

Now we have explained the psychology of why you didn't invest, let's reduce the final barriers.

• Financial Constraints - You can invest as little as €1 a month
• Time - You can buy shares/Funds in less than 1 minute online. Set up a monthly order and forget about it.
• Lack of Knowledge - We have the internet and an unlimited pool of educational tools to learn the basics.
• Complexity - Very simple once you know the basics, few clicks of a button.
• Risk Aversion - The largest 500 companies in the US called the S&P 500 has an index S&P 500. 2 in every 3 years it goes up, 1 in 3 it goes down. But over time It ALWAYS goes up. 5 years (7.51% Avg), 10 years (10.41% Avg), 20 years (7.64%) and 30 years (7.52%)

How to start:

1. Download a trading platform - My preference is Trading 212 or Etoro
2. Deposit a small lump and pick some shares/Funds. Maybe ask your kids what companies they like and invest in them. Stuff like Disney, Nike, Kellogg's, McDonald's or Hasbro things you spend money on your kids already. Funny how often the kids get it right, the trend is your friend!
3. On a yearly basis maybe sit down with them to reassess the portfolio and if they want to add new companies or add to the one they have.

My Story:

I have a bundle of joy at home, just gone 5 months now. I've set up an account and any monies gifted to us when he was born, all Child Benefit payments we have decided to invest on his behalf. I 100% agree I am in a privileged position to be able to do this. For the first few Christmas and Birthdays, we will put money into the account until he is big enough to notice the lack of presents from the parents.

If we just use the 140 EURO per month, at 7.5% (S&P Average returns) for 18 years. This will mean a pot of 59,940 EURO. If we can add in some gifts, communion money, etc it could be significantly higher. We could set him up for life, enough for a deposit on a house, college paid for. When he is in his 20s and a professional, this lesson of compounding interest will have peaked his curiosity and hopefully set him up for maxing out his pension, investing and creating new generational wealth.

FYI - My dad still works on the factory floor 46 years later, Mum was Part time when I went to school. So I didn't get taught anything about investing. They paid their house of in 18 years (25-year mortgage) So I came from that scenario of clear the mortgage first mentality. Only really got into investing 3 years ago, had always done the logical accountant thing though and contributed heavily to pensions.