If you want to teach your grandchildren how get beyond some of the most difficult challenges an investor can face, then do the following: Open up an account for them at either Fidelity or Vanguard. They’ll learn over the years that it’s good to be aligned with leaders in the industry. Next, buy the Vanguard Wellington fund (you can do it through Fidelity too) and have the statements delivered by mail, not online. Every month your grandchilden will get a statement as a reminder that they’re an investor. Help them add to it on an annual basis so they can see the mechanics of dividend payments and compound interest. Then show them the following chart and explain that if they remain disciplined, the same could happen to their money. It’s not a promise. But one of the most important lessons you’ll teach them is how to get off the sidelines, get their head in the game, and avoid that killer that can get the best of all of us—Inertia.
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