Kids and the Power of Time	Back to the archives

Charles B. Carlson, CFA
Contributing Editor, Dow Theory Forecasts

Last year I spoke to a group of sixth, seventh, and eighth graders at a school near my office. These budding Warren Buffetts had been studying stocks the months prior to my visit. (I wish I had learned about stocks before I started shaving.) 

Interestingly, the teacher told me the children wanted to learn how they could start investing with very little money ("Can you say B-U-Y-A-N-D-H-O-L-D-D-O-T-C-O-M?").

In preparing my talk, I struggled with the best way to present the benefits of investing. Then it hit me - show the kids the power of time in an investment program.

To that end, I used the following example: If a 10-year old sets aside just $16 per month (perhaps with a little help from mom and dad and the grandparents) in an individual stock and maintains this investment discipline for 50 years, he or she could have more than $277,000 at age 60 (assuming an average annual return of 10%.)

You may not fully appreciate the power of time in this example until you understand that the 10-year old invested only $9600 over the course of those 50 years to amass more than $277,000.

Here's another example of the power of time when it comes to kids and investing. I know of grandparents who, at the time of a grandchild's birth, set aside $4000 to fund that grandchild's retirement program. (By the way, what a nice legacy to leave to a grandchild - a retirement nest egg). Do you know how much that $4000 can grow to, without adding another penny, over 65 years (assuming a 10% annual return)?

Nearly $2 million.

That's the power of time. That's why it's so important to get a child started immediately investing. Doing so will change his or her life. I guarantee it!

The securities markets are subject to the risks of fluctuating prices and the uncertainty of rates of return and yields inherent in investing and past performance is no guarantee of future results.

Setting Up A Child's Investment Account
Kids and the Power of Time
A "Kiddie" 401(k) Plan!
Kids Should Buy STOCKS!

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