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Talk to your teenagers about building lifelong investment habits

Investments might be the last topic that comes to mind in relation to discussions with your teenager. However, I can safely say that talking investments along with that whole earning, saving and spending spiel is very critical to their development as responsible adults and their long-term financial well-being.

Teen years are critical. Adolescents have begun to develop independent thinking. Many 15-18 year olds have started working part-time after school or on weekends to generate some independent income. They have also started to give their future careers some thought. While no teenager is contemplating what their retirement will look like, parents have a role to play to educate their teens about the power of savings and investments. If introduced early enough, there is magnificent wealth generating power in regular saving, however humble its origins. Investing those saved dollars and compounding gains on those invested dollars (where the income and gains on investments, in turn, start earning an income) can generate a significant amount of wealth 50 years down the line when they may well be ready to retire. A very simple example would be to consider a $100 invested every year (that’s all!) from the age of 15 until 65, earning a 10.0% annual rate of return will grow to nearly $120,000. Obviously, a higher or lower rate of return will increase or decrease that amount but it is very reasonable to expect a 10.0% annual rate of return over that long a time frame.

In two previous columns in the January 2017 and February 2017 issues I discussed the “Four Pillars of Long-Term Investment Success” (also on my blog There are clear examples of how these principles work. While these four pillars and principles apply to everyone, irrespective of age or stage in life, in reality, the outcome can be spectacular the earlier this endeavour is undertaken.

The core message for young teens is to start small (like with a $100 a year, we’ve just seen what can happen with that!), start early, contribute regularly, resist the temptation to make withdrawals for unnecessary consumption and start building a portfolio of investments that over time can grow to be substantial.

Most teens realize at some point that at the core of all their efforts that lead to eventual success, whether in academics, music or sports is discipline. Discipline lies at the root of success in any endeavour and investing is no different!

Aaron Chaze | President| Portfolio Manager
Vulcan Asset Management

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