I was blessed with a family that never wanted for food, shelter, and money. We were by no means rich, but always had enough to get by, and then some. But what my hard-working parents (an engineer and a school teacher) didn’t do was plan for our future financially (other than giving us a great education, where every daughter has a doctorate degree, so we could manage our future ourselves). For this, we will always be grateful.
Furthermore, we grew up in a country with free higher education and no tuition and fees. Thus, we don’t have to grapple with student debt in our best years.
A debt-free life is wonderful. However, the world doesn’t look as rosy anymore now as it did 50 years ago; Daddy once said none of his kids would be as successful financially as he was, and he was right. Houses cost more nowadays; even with a great education, you often don’t make as much as your parents did back then with a lower academic degree; life got more expensive in many ways. Daddy had a big house and a Mercedes Benz. His kids have small houses or live for rent and drive a Volkswagen. And we are university professors and a physician.
Who knows what the situation with the job market and housing market, not to speak of retirement funds and medical care, will be like for my child, who is now almost 4, when he turns 40? Will he be able to afford a house at all? Housing prices keep rising, and ground is scarce (maybe the bubble will burst one day, but who knows?). Even if he gets a Master’s degree or a PhD, will he be able to afford the things he wants, such as studies abroad, travels, a fun hobby? Will he have a comfortable, secure retirement? There are more older than younger people living in Germany right now (the biggest age group of the population (about 16%) is comprised of the 50- to 59-year-olds), and it will only get worse as people lead longer lives thanks to advances in medicine, and fewer children are being born as women have become more emancipated and career oriented. Our generation pays our parents’ retirement (boomers). But who will pay my generation’s retirement (gen X)? Who will pay my child’s generation’s retirement? The young work force (gen Y) is shrinking and has to finance an ever-growing retired population with their taxes. Where will this leave generation Z?
“Z” stands for “zilch.” You can’t rely on social security in old age alone. Therefore, I wanted to start saving for my son since his birth. Since Lyons Cub is born, he has:
- a State Farm life insurance that will pay out when he turns 20 (his college fund), into which I put $50 every month;
- a Fidelity shares depot in the U.S.;
- a Flatex shares depot in Germany.
There’s not very much in his accounts yet, but what he has on his side is TIME. You don’t have that, but your kid does. 20 years make a huge difference when it comes to investing! Make wise investments and let them lie for many, many years, accumulating dividends, and add a little something here and there, like for each birthday, Christmas, or other holidays. Very important: don’t use up the dividends that are emitted, but re-invest them immediately, so your money keeps growing! Don’t underestimate the force of a few cents over time!
So where does the money come from that I invest?
Every time I find some change in my wallet, I put it into my son’s shares account. I even buy penny stocks (stocks for one or two dollars). Tell your kids’ grandparents that they have enough plastic toys and would rather have some money to invest from time to time. Plastic toys break and get thrown away. A smart investment will grow, not diminish, and yield interest, so your kid can hopefully some day buy his own car (not a “lemon,” but a safe, functional one with great insurance!). We all want the best and nothing but the best for our children.
Tip: A propos car — every time when I get back into the car from shopping where I have paid with cash, I put the change into that little trap door inside the car, yes, that one, right over the mirror. What is it there for, by the way? I always store change in it, small bills (no coins, as they might fall on your head). And when it’s full, I put the money in my checking account and from there transfer it into my son’s shares depot. It’s so easy! If I can do it, you can, too. It’s not much, but it adds up.
SIDE HUSTLES TO INVEST MONEY
Do you have a side hustle? In my free time, I edit and proofread students’ B.A. and M.A. theses for Mentorium, and every cent I make goes right into my son’s Flatex shares account. Sometimes, it’s 20 Euros, sometimes 80. It doesn’t matter. Again, it keeps accumulating. In addition, it’s fun, and I learn a lot about different academic fields and research. You won’t get rich through proof reading, but it’s about having and not having. And it reminds me of my time as an Assistant Professor of English in the U.S. This way, I can still do what I love to do for a couple of hours at night or on the weekend, while also having a 9-5 job.
In addition, I’m selling my Master’s thesis, my action research, my dissertation, and several other academic papers I have written in my past decade of studying and teaching English Education in the U.S. on GRIN. They only take very well written papers that have received an A or a B in your course, so if you are or were a straight A student, what keeps you from signing up with them and making some money off your past work that you poured your sweat and tears in? 😉 When people download one of your academic papers, you get paid a commission. Thus, instead of letting past papers rot in oblivion (as long as they have not been published in an academic journal, which is much better, of course, but doesn’t earn you any money, just fame), put them out there for the academic public to benefit from!
Also, I am an affiliate for Amazon, AWIN, and LinkWorth. Furthermore, I sell photos (mostly animal pictures) on Shutterstock. Thus, if you have a well-managed blog with great content that you maintain regularly, why not include some ads to make a few cents here and there (just don’t flood your blog with advertisements, because this will scare away your readers!). If you take great photos, you might as well sell them here and make them available for the public. (Best would be to use nature/animal pictures, not your children; they would require a model release, anyway, and you need to protect their privacy and identiy on the Internet.)
The best thing to do is START EARLY. Are you pregnant? Now is the time to prepare for your child’s financial future. Your child will thank you one day. Make up your mind what you want. Surf the Internet and find good offers that work with your budget. As soon as he/she is born, you can open his/her account and / or get a life insurance for your kiddo.
So what do you need to think about when starting to invest for your child? First of all, pick a depot without account fees. You would not want to lose your small gains right away. Fidelity (in the U.S.) and Flatex (in Germany) both offer depots without account fees. Then, either open a child’s account, or, if this is not offered, open it in your own name and transfer it to your child when he/she turns 18 (or 21, or whatever you deem mature enough to handle his/her own money).
There is one rule that can’t be stated enough: Never invest more than you can afford to lose. Let’s face it, you might luck out (maybe you bought Bitcoin when it was way down and became a millionaire?), or you might lose your whole investment by betting on the wrong company. It happens. So invest your change and gifted money that you don’t need to deduct from your living expenses, so you don’t have to make big sacrifices. I’m talking about left-over money here, as little as it may be. Don’t starve now to create a better future, because if you’re not healthy and happy in the here and now, you won’t HAVE a future!
The question remains: What do I invest in? Again, do your research. I had one topic that was dear to my heart: LITHIUM. And it isn’t only because I would really love to have an electric car (I don’t; can’t afford it) and believe lithium for batteries is the future. It’s because my late husband was bipolar and took lithium as medicine; it saved his life for many years and kept his mood stable. I got so used to his big, long, pink lithium pills that I thought “why not” when presented with an investment option. I addition, I like green energy and want to help save our world from the climate crisis. What can one person do in the face of it all? If you invest in lithium, you show that you believe electric cars are the future, that others will become obsolete one day, that they will become affordable for the masses, and that lithium will become a very sought after good. It is already, in fact. But it has a lot of growth potential.
Of course, there are lots of other things to invest in, like clean energy, emerging markets, artificial intelligence, self-driving devices, the health sector, big name companies you know and trust… the important thing is, your heart has to be in it. If you are not convinced by a company and don’t know what it is about, don’t invest in it. Be interested in the company. Visit the share holders’ conferences, or at least vote online (I always do that). Follow the news about the niche you are investing in, so you can adapt to sudden changes. Sometimes, a boss will resign — do you sell then? Sometime, there’s a merger. Do you buy more and hope for a quick rise? Sometimes, the company brings out a new medicine. Time to sell, because you think the shares have reached a peak and will drop, because most people will sell and pocket their gains? You need to be flexible and react quickly. Read up on the topic. I’m reading The Motley Fool, for example. I’m perusing Der Aktionär. I’m reading the trading info from Fidelity and Flatex right in my accounts, so I’m up-to-date about the current tops and flops. Another interesting source with lots of good information is Investopedia. Check out StockRover.
I’m a bloody beginner. Had it not been for a friend who told me about stock investments, I would have never tried it out. I am glad I did.
And of course, I regret that I didn’t start sooner to invest for my own future! Oh well. I can’t make up for the past 40 years, but my son can prepare for the next 40 years.
So what kind of lithium stock do I invest in for my son?
Here are the four companies I invest in (his Flatex account):
Albemarle dates back to 1887 and is a leading global producer of catalyst solutions and performance chemicals.
Orocobre is a dynamic global lithium carbonate supplier with a flagship facility in Argentina.
Lithium Americas, a Canada-based company, is listed on both the Toronto Stock Exchange (TSX) and New York Stock Exchange (NYSE) under the ticker symbol “LAC.”
According to its website, Vulcan Energy, located in Germany, “is aiming to decarbonize the transition to electric mobility through its world-first Zero Carbon Lithium™ business for electric vehicle batteries and its renewable energy business.”
My favorite is Vulcan because it seems more environmentally friendly than other lithium-producing companies. They use renewable heat derived from their geothermal brine to drive the lithium extraction process, all without fossil fuel consumption, so they can produce a unique, premium, battery-quality hydroxide product for EVs with a zero carbon footprint.
As you can see, my son possesses only between 5 and 12 shares of those companies’ stock so far. His gains are about 3-50 Euros. It’s not much (he also has shares from the health sector, the automotive industry, and other companies I deem successful), but each holiday, he gets a couple more shares. In the long run, they will hopefully gain in momentum and help him finance his first big necessities, like a bike. Also, when he is school-aged, I want to teach him how to deal with shares himself, so he can learn about responsibility regarding his own finances and understands risk.
Maybe I will post an update in a year from now, to revisit how Lyons Cub’s stocks have grown (or declined; who knows). You might or might not be sold on lithium; maybe try something else, but my advice is: try. Invest your change. Don’t invest more than you’re willing to lose, if the worst case happens. Re-invest your dividends. And rejoice about every little gain. Time is on your side.
Constant dropping wears away a stone.