Then and Now

We were taking some pictures of the kids today, and one photo reminded me of a picture we took 5 years ago.

The first picture was taken in December, also. It was the week we got our first digital camera, and we were photographing anything and everything!

School of Hard Knocks

Last spring I decided to help my kids learn about investing in mutual funds by suggesting they move their birthday/Christmas gift savings from a savings account making around 3% to a mutual fund. I showed them how to look up funds on Etrade and Morningstar, and I pointed out the criteria that they would understand: performance, sector breakdown, and top holdings.

Emily picked a conservative large growth fund with stock in companies she recognized, Pepsi, Apple,... John picked an international fund that had more drastic swings in returns, but he said he didn't mind the risk.

The chart below shows performance over the past 9 months: Emily's Fund(blue), S&P 500(red), John's Fund(yellow) .

Well, it has definitely been a learning experience. Losing such a large percentage of your money is a big shock to a kid. Emily's fund is down 24% and John's fund is down 43%. Hopefully, they will remember this lesson and get to experience the upside of investing soon!