Money-smart kids: A letter to beginning investors

[Octafish]

Great advice for young people -- and everybody, really.

There's just one problem the pundits always miss...

Money-smart kids: A letter to beginning investors

By JANET BODNAR
Dec. 5, 2015, Kiplinger’s Personal Finance

When my 20-something son, Peter, recently asked me for investing advice, I distilled the expertise of the Kiplinger staff with some thoughts of my own into an email. Peter says he found it “really helpful,” so I thought I’d share it.

Put safety first. Before you invest in anything, you should have money in the bank that you can easily get to in an emergency. Kiplinger generally recommends that you have at least enough to cover your expenses for six to 12 months. Although savings accounts are paying almost nothing right now, you can eke out 1 percent or so in top-yielding accounts.

Build a solid base. For longer-term money, such as money in your 401(k) plan or IRA, you can afford to take risks in the stock market. Stick with mutual funds, which let you diversify or spread your risk. The best funds to start out with, in my opinion, are index funds, which try to match a particular benchmark, such as Standard & Poor’s 500-stock index or a total stock market index. Another benefit of index funds: They have very low fees.

Peter, you asked about exchange-traded funds, or ETFs. An ETF is a kind of index fund. ETFs are popular because their fees are even lower than those of index mutual funds, and you can trade them throughout the day like stocks. We’ve compiled our favorite ETFs into the Kiplinger ETF 20.

SNIP...

Add a little spice. Managers of actively managed funds use their own judgment to try to get returns that beat the stock market. The trick for investors is to pick the best ones. At Kiplinger, we try to do this for you by choosing the Kiplinger 25, our favorite no-load funds. If you have index funds as a base, you can use these actively managed funds to complement your portfolio.

CONTINUED...

http://www.tulsaworld.com/business/moneypower/money-smart-kids-a-letter-to-beginning-investors/article_2bc7d855-0b68-5bfe-acfa-4da1e8a72a43.html

Anyone spot what's missing from this advice?

[roody]

1. Do no harm. Do good.

[Octafish]

3. The Oath by Hippocrates

I SWEAR by Apollo the physician, and Aesculapius, and Health, and All-heal, and all the gods and goddesses, that, according to my ability and judgment, I will keep this Oath and this stipulation- to reckon him who taught me this Art equally dear to me as my parents, to share my substance with him, and relieve his necessities if required; to look upon his offspring in the same footing as my own brothers, and to teach them this art, if they shall wish to learn it, without fee or stipulation; and that by precept, lecture, and every other mode of instruction, I will impart a knowledge of the Art to my own sons, and those of my teachers, and to disciples bound by a stipulation and oath according to the law of medicine, but to none others. I will follow that system of regimen which, according to my ability and judgment, I consider for the benefit of my patients, and abstain from whatever is deleterious and mischievous. I will give no deadly medicine to any one if asked, nor suggest any such counsel; and in like manner I will not give to a woman a pessary to produce abortion. With purity and with holiness I will pass my life and practice my Art. I will not cut persons laboring under the stone, but will leave this to be done by men who are practitioners of this work. Into whatever houses I enter, I will go into them for the benefit of the sick, and will abstain from every voluntary act of mischief and corruption; and, further from the seduction of females or males, of freemen and slaves. Whatever, in connection with my professional practice or not, in connection with it, I see or hear, in the life of men, which ought not to be spoken of abroad, I will not divulge, as reckoning that all such should be kept secret. While I continue to keep this Oath unviolated, may it be granted to me to enjoy life and the practice of the art, respected by all men, in all times! But should I trespass and violate this Oath, may the reverse be my lot!

http://classics.mit.edu/Hippocrates/hippooath.html

I, too, abide.

[whatthehey]

2. Presumably everyone who takes the easy bait

will first verify that their statements about earnings, hours, and employment status accurately reflect the data at bls.gov?

No? Ah well one can dream.

[Octafish]

4. That is the big picture.

My concern is the writer and Kiplinger's perspective that young people (or most anyone) has money.

How can one save or invest without the means?

Now, my niece started out of college making more than I ever did -- much to my dismay.

Most everyone else I know has had a hard go of it -- especially those who owe money for college.

[Sherman A1]

5. Precisely

My #2 Niece just graduated college having studied social work. She is in a part time temporary position paying just above minimum wage at a shelter for teens. She has to live at home with her folks because she needs what she makes to pay her student loans.

No, money for her own place much less for investment.

Great advice if you have any cash and from what I gather most don't .

[whatthehey]

6. That data is there too

People in mid to late 20s immediately after traditional college age have one of the lowest UE rates around.

http://www.bls.gov/web/empsit/cpseea10.htm

I stupidly only started my 401k at age 30, despite being employed long before that. I missed out on many high growth years because of that. People today should avoid that mistake.