Jack Bogle, the founder of Vanguard and index fund pioneer, counsels:
“Don’t look for the needle in the haystack. Just buy the haystack! ”
What’s Jack talking about? One of the smartest ways to invest.
You have to be insanely lucky to pick winning stocks. Even the pros can’t do it consistently. So just buy the whole market instead.
How? With an index fund.
Here’s how to get your teens in on the investing hunt:
- Save part of each paycheck. Convince your teens to save some fraction of that first summer or part time job income. How? Free money. See step 2.
- Offer a parent match. If you can, offer to match your teen’s savings, just like an employer would with a 401(k).
- Open a Roth IRA. If your teen is eligible (most are), open a Roth IRA so her money can grow tax free.
- Invest in a low cost index fund. Take Jack’s sage advice, and invest the money in low cost funds that track the whole market.
Decades later, your teen will have a haystack with lots of golden needles.
Get tomorrow’s tip here.