Whitney Houston sings, “I believe the children are our future
Teach them well and let them lead the way”. This lyric is from her hit song- the greatest love of all, a powerful and most empowering song. That lyric holds so much truth about our children, they are our future and we need to invest in their future. We as parents need to pave the way for our financial future so that our children can learn the way from us. Children mirror their parents as we are the main influencers of behaviour.
My mom, Mampandla, handled her finances well and was a good role model to emulate. She had bought her own car and paid off the bond of her own home. She had credit which she paid up on time each month. Except her monthly salary, she looked for ways to supplement that income.
This year I bought my son his first investment, an Exchange Trade Fund (ETF). It’s a learning experience for me. I used the online application tool, printed and signed the documents and sent them back to the company administering the ETF.
You can buy ETF’s on a debit order from as little as just R300 per month, or you can make a lump sum contribution from as little as R1000. I took the lump sum option, and learned that R1000 only buys one ETF; I had thought that the lump sum contribution can be spread over different ETFs. Remember, there are around 70 ETFs to choose from.
So I had just one choice to make out of that 70 and I went with the Satrix Indi 25. The Satrix Indi 25 tracks 25 JSE listed industrial companies. It is a basket of the 25 JSE listed companies, so your investment is not dependent on just one company, it is spread among these 25 companies- this offers diversification on your investment.
I came across an online article on Junior Investment Clubs; the club is called Ujamaa Junior Investment Club and is based in America. The article states, “Like many Americans, Damon Williams joined a stock investment club to eventually put his children through college. Unlike many of those Americans, Damon is just 11 years old.”
The children in this club, aged between 11 and 18 years, meet on a Saturday to discuss the research they have done on which companies they are likely to invest in. They have already acquired the skill on researching which companies are worth investing in. Financial literacy at a young age can only mean financial prosperity for these kids. How many of these junior clubs such as these do we have in our country?
Last year, I began reading about Warren Buffett; he’s an extremely wealthy value investor. According to an article I read about him, his very first investment was made at the age of 11 years old. Here is a passage from that article, “At 11 years old, Buffett buys his first stock – 6 shares of Cities Service (now known as CITGO – an Oil company) at $38 per share. He bought 3 for himself and 3 for his sister Doris.”
Teaching financial literacy to children from a young age will form a different way of thinking. Instead of only thinking about learning in order to get a cushy job, they can learn how to be entrepreneurs and build their own companies. They could even grow companies and have them publicly listed at a stock exchange.
The children are our future, lets teach them financial literacy and they will lead the way to financial freedom!
