TAKEAWAYS – PART THREE/FINAL: HOLIDAY GIFTS FOR THE KIDS; BUY THE TOY COMPANY, NOT THE TOYS – GUEST BLOGGER: George Wong
TAKEWAYS – PART THREE/FINAL: HOLIDAY GIFTS FOR THE KIDS; BUY THE TOY COMPANY, NOT THE TOYS – GUEST BLOGGER: George Wong
Disclaimer: Good Day, Readers. WealthBuildingPowers blog is a financial literacy/competency blog and does not provide specific investment recommendations.
PART THREE: BEYOND THE TOYS – TAKEAWAYS
GENERAL OBSERVATIONS
- Children learned over the years and in small chunk how to invest, manage, and create wealth. The 16-year cycle in this case study is the same time as it takes to go from grade one through college graduation.
- Children were exposed to, learned, and understood there are many types of assets to invest in.
- Young people can learn to some extent, the difference between “getting rich” and “getting wealthy.”
- Children can be taught, understand, and utilize financial literacy as a core life skill
- Young people can become comfortable in managing their own financial lives.
- Building wealth is about paying yourself first.
- The Federal and State governments should consider building such portfolios for each “means-tested” citizen, as the long-term results can far outweigh any demonstrable positive results from untargeted entitlements. This approach could help break the vicious poverty cycles that entitlement programs have been unable to accomplish since the war on poverty began.
SPECIFIC CASE STUDY OBSERVATIONS
- Each child now has a portfolio larger than what their parents currently have
- For four of the five kids, the portfolios are HUGE by family standards, and they are now afraid of making a mistake in managing the portfolio on their own
- Nephew 1 has spread the news to his peer group, and is now helping other young parents to create portfolios for their kids
- Nephew 1 and his wife are now continuously invested and inform me what equities they are buying when they receive cash gifts
- In 2015 at the dinner table, the kids asked my son, at that time the co-founder of his own hedge fund, what are good stocks to buy. He blurted out “BUY ONLY INDEX FUNDS.” My son was pointing out the worst-kept secret in funds management — 95% of managers managing a handpicked fund are not able to beat the S & P 500 Index consistently. A few months later, he returned the monies to his investors, and closed his hedge fund.
HELPFUL TIPS
- Because they were minors and not allowed to have financial accounts on their own, use an UGMA (Uniform Gift to Minors Act) account for each child. (TIP: In situations like this, it is sometimes advantageous to have multiple accounts at one brokerage house so that one has pricing leverage if the brokerage firm imposes maintenance or transactional fees on accounts.)
- Buying less than 100 shares of stock when there is a trading fee (e.g. $9.95 fee) per transaction can create disproportional stock acquisition costs. Consider the following tactic. Have donor purchase one small block of a stock in his own account; then sprinkle the stocks to the kids’ accounts. For instance, if four kids each wanted four shares of XYZ at $25, buy 16 shares of XYZ for $400, eat the trade $9.95 fee, and use an internal transfer at the brokerage house to the deposit four shares of XYZ into each account. This beats having each child buy 4 shares inside their own accounts and paying a possible and separate $9.95 {an effective 9.95% in this case} fee separately. Consider this trick if brokerage houses return to transaction fees.
- Consider a default stock to buy for the kids when they have no ideas or are not interested in selecting their own stocks. A broad-based index exchange traded fund (ETF) such as the VTI or SPY is a practical way to populate a portfolio. VTI and SPY are exchange traded funds that can be purchased during trading hours, and may be purchased or sold without a transaction fee, depending on the brokerage house. Certain branded mutual funds that are equivalents of VTI or SPY can cost $49.00 per transaction when purchased through a brokerage house, whether you buy one or one thousand shares.
- In all investing activities fees matter! Understand and minimize, if not avoidable, the fees.
- In all families that build their own wealth from the ground up, a culture of active and continuous learning around financial literacy is created and fostered.
BIO George Wong – Senior Advisor at Shark Wheel LLC and Senior Advisor at Intex Industries (Xiamen) Co., Ltd
George Wong is semi-retired and continues to work as senior advisor to two companies, owner-manager of the family’s commercial, and multifamily real estate, board member in two non-profit educational organizations, and manager of several stock and bond portfolios for extended family. His professional career included stints at Price WaterhouseCoopers as a management consultant, a commercial real estate firm as developer/portfolio manager, a commercial printing company as COO, a legal document management systems start-up as V.P. Operations, RR Donnelley Financial Print as Plant Manager, Coldwell Banker Residential Brokerage as Finance Manager, Intex Plastics Division as Senior Advisor, and Shark Wheel Inc as co-founder-CFO-Senior Advisor. Out of college, he was a middle school teacher at Inglewood Unified Schools, and he worked for two federally-funded organizations advising minority-owned businesses. His previous community involvement included the turnaround of a Pasadena unit of the National Urban Coalition, board membership in the Pasadena chapter of the Urban League, and advisor to the California Senate Select Committee on Small Business Enterprises. George was raised in South Central Los Angeles, where his entire education from elementary school through graduate school was obtained within a three-mile stretch on one street. He remains active in south Los Angeles as a board member at a state-funded child-care center for low-income parents that he helped found 40+ years ago and working with the tenants at the family’s commercial buildings to keep the tenants (all people of color and immigrants) in business. He is married 40+ years and has two highly successful sons in business, following degrees at two ivy-league schools and the University of Michigan. George has degrees in Aerospace Engineering, Education, and the MBA, all from the University of Southern California. George still competes in the 50 Meter and 100 Meter Dashes. He is a very proud to say that his understanding of the business world and finance comes from reading the Wall Street Journal every day since he was 15.
CONCLUSION – STYRON POWERS
Special Thanks to George for taking the time to share his family’s journey which will help to increase my readers’ financial literacy and help more individuals start their road to Financial Freedom. George and his wife embarked on a 56-year Financial Literacy journey, working with FOUR generations of family members. They sucesfully increased financial literacy and gave a kick start to these young adults achieving financial freedom and leaving a financial legacy.
My brother and I have taken similar steps for our daughters and nieces. Today we contribute to their Roth IRA account in lieu of unnecessary gifts/stuff. Majority of gifts/stuff we provide young people end of in a landfill! Consider giving a gift that can impact their future!
I encourage every reader, continue building your financial literacy and investing. I hope many days of living your best live (as my daughter loves to say) lie ahead.
If any questions, please reach out and I will respond or forward to George for a reply.
For anyone who needs help setting this type of account up, reach out at styronnarz2@aol.com and I will assist.
“IT’S BEGINNING TO LOOK A LOT LIKE CHRISTMAS”!
LET’S MAKE SOME MONEY – CRYPTOCURRENCY IS ACCEPTED!
YOUR GREATNESS IS NOT WHAT YOU HAVE; IT’S WHAT YOU GIVE! – SOME CHARITIES I SUPPORT
St Jude Hospital: https://www.stjude.org/
Wounded Warrior Project: https://www.woundedwarriorproject.org
Folds of Honor: https://foldsofhonor.org
Wilson’s No Kill Animal Shelter: https://wcnkas.org
TRUST ME – YOU WILL LIKE THE BELOW BLOGS! {IT’S FREE!}
PART ONE: HOLIDAY GIFTS FOR THE KIDS: BUY THE TOY COMPANY, NOT THE TOYS {THREE PART SERIES} – GUEST BLOGGER: George Wong
PART TWO: OWN THE COMPANY THAT MAKES AND SELLS THE TOYS – PART TWO OF THREE: HOLIDAY GIFTS FOR THE KIDS; BUY THE TOY COMPANY, NOT THE TOYS – GUEST AUTHOR: George Wong
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ABOUT ME
I am a proud nerd (as my beautiful wife and daughter have told me) investment and finance blogger with an N.C. State, Chemical Engineering, University Rutgers, MBA and Harvard University, Advanced Management education.
I left a corporate career because I desired to make a difference in helping others improve their financial literacy and achieve financial freedom. I was blessed to be coached and mentored by strong women and men in my family and professional life. It is my time to serve and give back.
DISCLAIMER
I started my first business at ~13 years of age (a small but brilliantly created plant nursery). I am a successful investor in stocks, options, real estate and am happy to share my finance and investment lessons. I am NOT a licensed financial advisor. Please do not construe my suggestions on this blog as recommendations for your situation.As an investor, you must establish your risk/loss tolerance. Investment in any asset involves risk, including complete loss.
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