Investing Rules & Goals

This is a rule that my father actually set for me when I first started investing. The purpose of this rule is to take away any significant downside risk to your child. If you want them to buy into the idea that investing is good over the long term, the more obstacles you can remove, the better. So if you can guarantee that at the very least, they won’t lose any money that they have set aside then there isn’t really anything to worry about. This of course only works if you keep the investments to safer ones, but it should help your child feel confident in contributing consistently.

25 seems like a good age to hand over the reins. The idea is for this money to either feed the purchase of a house, start a family, or be the basis for any other large life purchases that may come up. The goal is that by the time our kids turn 25 they have really locked into longer-term visions of their future and won’t be tempted to blow the money on the shorter-term goals of younger individuals.

Gradual increases in the weekly contribution amount will be made as our kids get older. We don’t have these all mapped out quite yet as situations can change over the years, but it is good to have a plan. These numbers are guaranteed base contributions and are not connected to chores, rewards, or any kind of employment. Here is what we have in mind so far:

• Age 0: $10/wk ($520 annually) 
• Age 1: $13/wk ($676 annually) 
• Age 2: $23/wk ($1,196 annually) 
• Age 3: $30/wk ($1,560 annually)
• Age 5: $50/wk ($2,600 annually)
• Age 10: $75/wk ($3,900 annually)

In addition to our base contributions, any earned income such as allowance, chores, rewards, side hustles, or employment will require that a minimum of 30% be invested into the portfolio. This is to strengthen the concept that you should always save and invest FIRST before making any purchases and then attempting to invest after.

Should any of the investments in the portfolio generate dividend income, this will automatically be reinvested. The dividend income will not reduce the amount of any other expected contributions.