How and what to invest in at this time

Stargazer,

Hi What a daughter: one who saves $150 pw ( I have two kids: a son almost 21 and a great saver who will be settleing on his 2 nd. IP in a couple of weeks, and a 18 yo daughter who finds its very difficult to save a dollar(too many clubs to see).

I would recommend that your daughter do the following:

1. Deposit her savings into Macquarie. ING for better interest approx 5%. then

2. Get a copy of Robert Kiosaki “Rich Dad Poor Dad” to start her education (you could get a loan copy from your local libary for free),

and take it from there. Goodluck.

hrm

Hi Stargazer,

Ask your daughter whether she would like to read the following about the best investor the world has ever seen:

“Warren Edward Buffett was born on 30 August 1930. He jokingly says that he was conceived during the fall of the 1929 stock market crash because his stockbroker father had so little to do then.

At the age of six, he purchased a six-pack of Coke bottles for 25 cents and sold them for a nickel each, setting a lifelong benchmark of a 20% investment return. Fifty years later, his company became the largest shareholder of Coca Cola.

By age eight, he read books about business. By age ten, he checked out every book from the local Omaha library about investing, finance and the stock market.

At eleven years old, he bought his first 3 shares in a company at $38 per share. The price soon fell to $27, but not long after, went to $40. Warren sold but learned an important and early lesson when the price of that share rose to over $200 each. This first experience of selling based on price instead of value would form a cornerstone in his investment philosophy.

At fourteen, Warren was making $175 a month delivering the Washington Post. Later, his company became the largest shareholder of Washington Post.

He finished high school at age sixteen and had a self made net worth of $6,000. He had already read 100 business books.

Warren graduated with a Bachelor of Science in Economics from the University of Nebraska at the age of nineteen.

At 21, he graduated with a Masters in Economics from Columbia University where he was taught by Benjamin Graham, an important mentor for the young Buffett.
At the age of 21, Buffett discovered that his mentor, Graham, was Chairman of GEICO insurance. Buffett instinctively knew he had to learn more about it.

He took the train to Washington to learn from a GEICO executive working on a Saturday and repeated the visits for some time. Buffett invested all of his net worth $10,282 at the time, into GEICO. This experience would also help him understand the company that he would one day own in its entirety.

Upon graduation, Buffett worked with his father as a stockbroker and taught a night class (called Investment Principles) at the University of Omaha.

At 24, he was offered employment by Graham in New York. Two years later, Graham retired and Buffett returned to Omaha to launch a home based investment partnership. His net worth was now $140,000.

At 27, he bought his 5 bedroom house in Omaha, for $31,500. This was 10% of his net worth. He still lives in the same house today.

By age 30, he became a millionaire. During the 13 years that he managed the partnership, the average annual return was 29.5% p.a.
In 1962, Buffett began buying shares in a textile manufacturing firm called Berkshire Hathaway, based in New Bedford, Massachusetts, for $7 a share, which was a substantial discount to its $17 book value. A year later, the Buffett partnership was its largest shareholder.

Apparently, Buffett later calls this investment to be a mistake. He took control of the company in 1965 and closed it some 20 years later because he was unable to sustain the textile business against cheaper foreign companies.

In 1969, following his most successful year, Buffett closed the partnership and liquidated the $900 million portfolio to its partners because he felt that he could no longer find excellent value investments in a runaway bull market.

At 39, his net worth was $25 million and he owned almost 50% of Berkshire. He then became Chairman of Berkshire and began operating within a publicly traded corporation.

Under a partnership, he selected the partners he wanted. With a public company, other shareholders selected him and he wanted to have the right ones select and the right ones to stay. He does this by communications through his annual letter to shareholders.

Buffett became a billionaire at 56.

With a 29.55% average annual return for 13 years with the previous Buffett partnership and a 22.6% average annual return with Berkshire over 38 years compared to 11% p.a. for the S & P 500, there is no close second place to Buffett’s investment record.

USD10,000 invested in Berkshire Hathaway (Warren Buffett’s company) in 1964 is now worth USD30 million.”

Regards.

Hi there,
I have money in both ING and easystreet (no complaints) and was interested to hear about bankwest’s rate of 6%. I just went to the bankwest site to find which acct and couldn’t find it. Can you please point me in the right direction? The highest rate I’ve found is with easystreet.com,au at 5.65%
Matt

Hi Stargazer,

Your daughter can do much better than earning 0.1% bank account interest.

She could consider one of the many e-accounts already mentioned or a Cash Management Trust. Either way, she will earn much more income than if she left her money in the bank.

Your daughter can use one of these higher interest paying accounts until she makes her first investment.

DIY Investing
Discounted Financial Products
http://www.diyinvesting.com.au

Heck, with an extra $12,ooo from the government (vic), she could buy her own place. Just live in it for 6 months, then rent it out. Thats $27,000 as a deposit.

Nothing stopping her getting some friends in to rent the other rooms. Perfect time frame to do a part time reno.

All legit.

Good luck.

Lifexperience

Great post Techno.

Stargazer, sounds like a higher earning account (or term depost) is a great start.

I’s also suggest you visit a large book store and look through the investment section. Even though you say she would not sit and read there are books written specifically for women and have been printed with ‘hip’ looking covers which may attract her attention.

just a thought.

You get sucked into those investment books and find them hard to put down. I’m with the others, invest in education; books and night course at TAFE or a part time business degree. She can turn this start into something that she (and you, perhaps)can’t even imagine. You know her best though and she has to be ready. Invest in education, saving won’t do it for her in the long run.

AXJ