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Hearts of Gold

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Kids are sponges. They remember what you tell them about saving money. They’re also like jukeboxes when it comes to singing back songs. But they might not always understand what they’re singing about—take, for example, “I made enough money to buy Miami / But I pissed it away so fast” from Jimmy Buffett’s “A Pirate Looks at 40.” Understanding some scenarios comes with age.

Imagine if you never lost money in the stock market. When kids save money, they’re not worried about the market—they’re too busy counting their cash. They count it again and again and again. Then they tell you how much they have. After a while, the dollars turn into tens, and then hundreds, and then you hear, “I have $200!”

Unfortunately, the average investor expects too much from the market. A prospective client recently told me he expects 10-12% a year to make up some ground from 2008. Taking big losses is a killer. In 2008, stocks fell by about 40%. It’ll take a 67% gain just to get you back the money you lost.

Kids are happy to simply accumulate money regardless of the market. Investors could learn a lot from them. Don’t be greedy. Imagine how you’d feel if you never lost money in the stock market. At a compounded rate of 4%, you’d double your money in 18 years. That’s about the age when your “Hearts of Gold” will need to be taught how to be smart with their money.

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E.J. Smith

Editor-in-Chief
E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zilldjians. He grew-up worshiping Neil Peart of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris. Please get in touch with E.J. at ejsmith@youngresearch.com.