{"id":9914,"date":"2012-12-24T08:00:46","date_gmt":"2012-12-24T15:00:46","guid":{"rendered":"http:\/\/dailyimprovisations.com\/?p=9914"},"modified":"2012-12-24T10:53:38","modified_gmt":"2012-12-24T17:53:38","slug":"profile-of-an-investor-a-lesson-in-passing-on-money-management-skills-to-your-children","status":"publish","type":"post","link":"https:\/\/dailyimprovisations.com\/profile-of-an-investor-a-lesson-in-passing-on-money-management-skills-to-your-children\/","title":{"rendered":"Profile of an Investor – A Lesson in Passing on Money Management Skills to Your Children"},"content":{"rendered":"

(This is a true story, but names have been withheld to protect privacy)<\/em><\/p>\n

When Mr. X was a boy, his dad was a business owner who worked hard 6 days a week.<\/strong>\u00a0 By this example, the children were taught the value of work, saving money, and taking good care of the house and the car so that those items would last. \u00a0Expectations were clear and reinforced with disciplinary measures.<\/p>\n

Mr. X’s mother worked hours such that she was home when the children were home<\/strong>. \u00a0When home, the children learned about things like gardening, food preservation, and keeping up with the painting, all while having a good time together. \u00a0 What was missing in all of this was parental direction regarding finances.\u00a0\u00a0Money was a secret and mysterious subject.<\/em><\/p>\n

Fortunately, Mr. X took a consumer math class in high school.<\/strong> \u00a0He was surprised to discover that getting a loan results in paying about three times as much for a purchase. \u00a0He immediately became averse to debt. \u00a0Still, he no idea of managing savings by investing them.<\/em><\/p>\n

College was the next stop for Mr. X.<\/strong> \u00a0Although he had no insight into how his parents handled their money, when he asked for help with his college costs, they contributed some. \u00a0However, Mr. X had to work after school and during the summer to come up with most of the money. \u00a0Then, two years into his college courses, Mr. X realized that he didn’t know what he wanted to pursue; plus, he wanted to be independent. \u00a0It was time to think, work, and save money for when he would go back to college a year later.\u00a0<\/em><\/p>\n

When he returned to college to study industrial engineering, Mr. X was paying 100% of his expenses.<\/strong> \u00a0Now, he noticed that he was much more careful about taking meaningful classes. \u00a0He wanted to get his money’s worth! \u00a0The concept of getting a good value for his money was beginning to coalesce more clearly.<\/em><\/p>\n

He and some friends found that the basement of the house they had rented was quite full of moldy throw-aways from previous renters. \u00a0<\/strong>They mentioned this to their landlord, who happened to be a builder. \u00a0He offered to pay them to clean it up. \u00a0When they were done, he asked if they were interested in any more work. \u00a0Only Mr. X said he was! \u00a0He began mowing lawns and cleaning houses for the man, then gradually worked his way up to roofing and being on the construction crew.<\/p>\n

Too many hours of work a week made it very hard to keep up with his studying.<\/strong>\u00a0 Possibly more importantly, Mr. X was learning a lot from his employer. \u00a0This man owned real estate and a construction company. \u00a0Mr. X saw how profitable it was and began forming a plan to do similar things himself. \u00a0As soon as he graduated from college, he paid off all his debt in one year. \u00a0The next year, he bought himself a fixer-upper. \u00a0<\/em><\/p>\n

In 3-years-worth of all his free time, while working 50 hours a week, Mr. X worked on that house.<\/strong> \u00a0He fixed everything structural in it, from plumbing to wiring. \u00a0 When he sold it, he made enough money\u00a0to be able to buy a duplex and start the process all over. \u00a0However, now he was beginning to notice that doing all the work himself was not necessarily the best use of his resources. \u00a0He began to think about the benefits of hiring someone so that the property could be rented or sold more quickly. \u00a0He was also seeing that all the effort he was putting into fixing everything was not paying off. \u00a0People weren’t willing to pay that much for new plumbing and electrical wiring. \u00a0\u00a0Sweat equity<\/a> was not proving to be a good use of his time.<\/em><\/p>\n

With this second house half-gutted, Mr. X went to visit his sister, who introduced him to the woman of his dreams.<\/strong> \u00a0She was a medical student with loads of debt, who needed to be moving to another state for her residency<\/a>. \u00a0 He took 6 months to finish his house project, then moved out-of-state and got married. \u00a0It was going far backwards financially, but it was worth it. \u00a0He had to deal with a discouraging job market in this new location, and the real estate market was not nearly as active as in the larger city he had been in. \u00a0Not only that, but his wife was getting paid very minimal wages as a resident doctor. \u00a0It was time for a new plan and a new schedule of paying down their debt.<\/em><\/p>\n

After those lean five years, his wife got a job in another somewhat small city.<\/strong>\u00a0 Mr. X was able to continue his computer work for a company via long distance. \u00a0He kept making some contributions to the 401K account that he had started about 12 years prior, when working as an industrial engineer. \u00a0His wife also started saving in one. \u00a0When they decided to go ahead and have kids, Mr. X made the choice to be a stay-at-home dad with them. \u00a0Reading Your Money or Your Life<\/a>\"\"strongly influenced that decision. \u00a0It looked like anything left after taxes and expenses-likely-to-occur-if-both-parents-worked, might just go toward paying a nanny. \u00a0<\/em><\/p>\n

Making good use of the family income became even more important<\/strong>. \u00a0Mr. X realized he should have taken time earlier in his adult life to learn about investing, but now was better than never. \u00a0What he learned lead Mr. X to scrutinize the management of their 401K accounts. \u00a0It seemed to Mr. X that the fund managers were not working nearly as hard as he and his wife were, nor were they giving very good advice. \u00a0<\/em>He began to contemplate managing his own stock market investments.<\/p>\n

Meanwhile, Mr. X and his wife had invested in some real estate in the new city, so he was still making good use of his other knowledge.<\/strong> \u00a0Still, the stock market seemed to have a different kind of dynamic and potential. \u00a0 About a year ago, he talked to his accountant about it and began attending American Association of Individual Investors<\/a> (AAII) meetings to learn as much as he could. \u00a0He started reading voraciously about the stock market, often into the wee hours of the morning. \u00a0A couple of books he found useful are: \u00a0Investing DeMYSTiFieD, Second Edition<\/a>\"\"and Investing For Dummies<\/a>\"\". \u00a0He also read a lot of AAII articles.<\/p>\n

The goal is to amass a knowledge base and get to the place where he feels comfortable firing his fund managers.<\/strong>\u00a0 Mr. X is tired of paying them fees that seem like money down the drain. \u00a0He has finally opened an online brokerage account. \u00a0He thinks he will be ready to take over for the so-called “professional” money managers very soon. \u00a0He sees himself as becoming a conservative, value oriented investor, but is carefully sifting through all the different investment philosophies. \u00a0At age 49, he feels like he is still playing catch-up in the world of investment, partly due to not having parental guidance and partly due to his earlier lack of initiative. \u00a0Since he doesn’t think the pace that a doctor works is something his wife can maintain, he is highly motivated to learn to invest well. \u00a0Mr. X says it’s his job to make sure the family finances are well prepared for retirement.<\/em><\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

(This is a true story, but names have been withheld to protect privacy) When Mr. X was a boy, his dad was a business owner who worked hard 6 days a week.\u00a0 By this example, the children were taught the value of work, saving money, and taking good care of the house and the car […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","footnotes":""},"categories":[28,27],"tags":[57,48],"_links":{"self":[{"href":"https:\/\/dailyimprovisations.com\/wp-json\/wp\/v2\/posts\/9914"}],"collection":[{"href":"https:\/\/dailyimprovisations.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/dailyimprovisations.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/dailyimprovisations.com\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/dailyimprovisations.com\/wp-json\/wp\/v2\/comments?post=9914"}],"version-history":[{"count":0,"href":"https:\/\/dailyimprovisations.com\/wp-json\/wp\/v2\/posts\/9914\/revisions"}],"wp:attachment":[{"href":"https:\/\/dailyimprovisations.com\/wp-json\/wp\/v2\/media?parent=9914"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dailyimprovisations.com\/wp-json\/wp\/v2\/categories?post=9914"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dailyimprovisations.com\/wp-json\/wp\/v2\/tags?post=9914"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}