My son started working part-time over the past two summers. He’s still under 18 but that didn’t stop my partner and me from talking to him about money.
We give both of our children a very detailed education on finances, investing, and debt. It’s an education that I had to learn the hard way, but that’s for another story.
” I did it for the dividends.”
Earlier this year I opened up a Minor Roth IRA for him, it’s a custodial account where he gets to deposit his part-time income into it when he hits $1,000 initially. The max he can contribute is up to $6,000.
After we opened the account, I asked him what does he want to invest in? That led to a lot of great discussions because I didn’t want him to take the attitude of “whatever you think is the best Dad.”
Then he stunned me, he said, “well I like drinking coke, so maybe I’ll buy Coca Cola.” For a moment I thought I was looking at a future Warren Buffet because his sage advice is always to invest in what you know.
We talked some more and I explained to him that Coca Cola (KO) was one of those companies that pay dividends to their shareholders.
He got a whopping $7.13 for the quarter…
He thought it was a cool thing to get paid for owning a company, like a business owner making profits. So we looked up the stock chart, looked at the dividend yield (he was more interested in how much money he’d get per share), and then placed a market buy order.
In a few seconds, he became the proud owner of 17 shares of Coca Cola.
In the summer we were invited to a few dinner and pool parties. These were all vaccinated events and we all felt safe to do so.
At one party some of the topics turned to how well the stock market has been doing lately when my son chimed in that he bought his first stock this year.
He was showered with praise when he told him that it was Coca Cola.
Then he proudly exclaimed, “I did it for the dividends.”
I just smiled because dividend investing is such a long-term game. Granted, it’s not like investing in (if you call it that) Tesla (TSLA) but this little start at his age should set him up for success later on in life.
I often write about how love is a renewable resource but time is not. Making a smart decision today to invest wisely does have a huge payout later on in life after time has passed.
I look forward to how my son manages his investment going forward.
Oh, he just got his first dividend. He got a whopping $7.13 for the quarter, but that was his first investment income, something I wished I had learned when I was his age.