Teaching teens to invest (France)

[johnlinda]

Really looking for advice and thoughts. We live and are tax residents in France. Dad is totally uninterested in doing anything with

I have 4 teens, 1 x 19, 2 x 18, 1 x 15 and myself (53).

I've said that I will give them each €30 / month to invest, but that it has to be invested (so preferably not in a Livret A, which is typically at 3%). If needs be I can do some capital each too if necessary. I appreciate it's not much, but I want to teach them to be a little more questioning and interested. Also I think it is an amount that they will be able to afford to take over themselves when they are earning, so giving them the habitL

My plan is to get together every 6 months or so and compare how we are each doing.

So here is a list of things I think I need to cover. Please add anything you think I've forgotten. Or correct anything I've got wrong.

• What are your investing ethics? Sustainability, environmental, pure profit, elderly, health, tech or whatever
• Cost of living - and that you should be getting more from your investment than that if possible
• Fees
• Taxes and when they are applied (so for shares they'll be 30% if there are dividends + capital gains when they are sold).
• What do you want to invest in? I'm thinking of ETFs for myself (with dividends or reinvesting?), but maybe an SCPI like moniwan (which also has a savings plan) would be something to look at, any other ideas??
• How long term do you want this to be? (I'm saying a minimum of 5 years)
• Apetite for risk
• Diversification
• A look at the vocabulary and what they need to know / understand.
  • Inflation rate
  • Savings accounts (Livret A, Livret Jeune, LEP, PEL, CEL, Term deposits)
  • ETF
  • Stocks
  • Dividends
  • Compound interest
  • Fonds communs de placement
  • Obligations
  • Performance
  • Volatility

I'd really love anyone's thoughts on any of this. Thanks

 

[sushiburger]

@johnlinda I have very young kids, just started the concept of pocket money, and live in France. I don't think I will be teaching any of my teenagers any of these things in so much depth. I agree with diversification and compound interest. I will concentrate on the difference between good debt and bad debt. Saving with milestones and targets. And number one is budgeting and spending/account tracking. It's the last one keeping young people poor, not their knowledge of different ETF funds.

Phillip.

 

[johnlinda]

@sushiburger Hi Phillip

I did budgeting, spending and account tracking with them when they were younger. They've always had a fairly generous allowance because they bought all their own clothes, presents for friends etc from about 11. I pay for travel and phones. So they've always had to budget. I read a book called the Entitlement Trap, which had some brilliant concepts in, but I wasn't brave enough to go the whole way.

 

[pipersmaw]

@johnlinda I donno, it sounds like they've already a good understanding of budgeting, so leave them alone and don't occupy the whole financing topic with 'parental energy'. What i want to say is, that teens sometimes just do not want to do the same thing that they connect with their parents. offer them help if they're interested but don't kill their interest before it's awaken, especially your 15yo.

 

[sushiburger]

@pipersmaw Agreed. Sounds like you've done a fantastic job already as a parent. I think you've already given them the right tools. Personally, my next step will be to teach them how to run a small business. It's just budgeting with extra rules. At some point one of the kids will have "a great idea" and want to set something up to pursue it. Being able to put together a business plan is important. And you REALLY need to know the rules in France. For instance if you pay somebody a salary, you pay nearly 100% again of that salary as tax to the government in "social contributions". I'll leave your list at the top for my kids when they are in their mid-20s.

Phillip.

 

[joanr65]

@johnlinda On a lighthearted note, your exercise sounds like why JL Collins ended up writing his best-seller "The Simple Path to Wealth". Because as it turned out, the teenager in that case (Collins's daughter) actually wasn't the slightest bit interested to hear about finance, and so Collins ended up putting his lessons down in text instead.

Maybe your children are more receptive, and I'm certainly not telling you to not try this. However, my experience is that you can go a long way as a parent without holding biannual finance seminars like this.

I think the most important thing you can do is (A) take charge of your own finances and (B) talk openly to your children (at an appropriate level of detail) about the family's financial matters such as spending, saving, etc.

Then you simply lead by example, because your children are like little sponges that will absorb whatever you do yourself. And already from childhood they're steered away from that extremely harmful mindset that personal finance is scary and something to be avoided.

The former, open approach to money is basically what my own parents did. I NEVER received a single explicit lecture about finance. Yet, just by living in a household like this, I left home with many core lessons:

• Be thoughtful about spending, live below your means, and invest the rest.
• There's good debt (mortgages etc.) and bad debt (credit card debt, pay-day loans, etc.).
• In using your financial assets, prioritize gaining time for yourself and your family (e.g., working less, taking vacations) instead of material spending.
• Investing is something done on a multi-decadal timeframe.
• A long-term investing habit can, over decades, result in significant supplementary income and ability to work less.

Sometime in my forties I realized my long-term financial planning had turned into something that's little different from what my parents always did. I didn't do this consciously at all -- it's just that an apple doesn't fall far from the tree.

 

[bijurensol]

@johnlinda Giving them 30 / month when they don't know what to do with them is an... interesting way of teaching.

Anyway, you local bank might be one which is interested in educating youth in finance, economics and investing. There's a EU framework or something, because my local one did that last year, and prior to that - in a form of remote lectures and providing digital 'printed' material.

If not i would really suggest investing into a coherent book (proper education one with terms explained, and homework assignments on finance math). And from there adjacently teach about actually available instruments, their costs, taxation and stuff.

 

[pandu]

@johnlinda I would put extra attention to compound interest and index funds. Also avoid making it too much of a game where they try to beat each other, then it’s too tempting to take high risks and turn it into a gambling game.

 

[tommyszc]

@johnlinda That's good, just the first point I'd say, the first thing you learn in the markets is to put your ego aside. The market doesn't take your tastes into account, and that's a mistake a lot of people make. After that, what you want to learn is fine, but unless you just want to learn how to invest in well-known indexes (s&p500, dax, cac40), it'll never be enough to understand the markets. It's one of the most complicated things, and for that you need to read books on the subject. I can recommend 3 books. How to Make Money in Stocks Complete Investing System-by William J. O'Neil (explains everything about the market), The Lords of Easy Money - Cristopher Leonard (explained the policies of the FED and how it affects the market), The changing world order - Ray Dalio (explains how understanding the past predicts future movement in the market). It's maybe very advanced but they are no in between in the market.

But if it means taking small risks by investing in well-known etfs, then that's fine. If it's investing in single stcoks, then you need to learn a lot more.

 

[sixinthemorning]

@johnlinda You’ll end up just stressing them out. They need to know that their dad is a master of it and can reach out anytime they need him.

On top of that, investing real money from hard work is a completely different thing that playing around with pocket money.