Daddy Tax: How to Teach Your Kids to Invest

By Kevin M. Russak

How if you start saving and investing at a young age that it will grow overtime.

It gives practical advice and how you can start with small amounts of money but doing it on a regular basis will make you a wealthy investor.

• Language: English
• Publisher: AuthorHouse
• Release date: Apr 16, 2014
• ISBN: 9781491867624

Kevin M. Russak

Kevin lives in Vero Beach, FL and is 50 years old and is a caregiver to his father who is 90 years old. His father retired when he was 50 and Kevin retired at 45 to take care of his Dad. He started learning about investing when he was 11 years old which helped him when he was older.

Book preview

CHAPTER 1

WHAT IS THE DADDY TAX

It is pretty simple when your children get money as gifts take a little bit off it like 25% of it and invest it in dividend stocks and reinvest the dividends in more stocks. Let you kids watch and see what you are also doing.

They might when they are young be upset you doing this but when they end up at 16 and there is enough money in their account to pay cash for a new car their mind will change.

My cousin did this with his kids every time they got money as a gift or working for it doing odd jobs he took some of the money and brought stocks with it. My cousins son use to get upset he did this but now that he is an adult he remembers it and says he plans on doing that with his kids. His son calls it the Daddy tax and he use to go and collect plastic water bottles and soda can’s to turn into get money and when he got home with the items wanted his Dad to take him to the store to get his deposit money back on it. What did his Dad then do figured out 25% of the amount of money and said you owe me so much money out of it and he said I am going to invest it for you.

This Daddy tax also helped but my cousins kids though college also, pay cash for there first cars without a car payment and there was always investment left over.

My cousin brought good companies that every year would raise there dividends so the stock usually had a chance of going up in value every year also. He also let his kids see what he was doing and how they kept getting even more shares of stock every time a statement came in.

The one thing this shows is how small amount of money invested will add up to a lot of money over time. How the dividends show how compounding of money works. How during good times you get less stock and during bad times you end up getting more stocks. Dollar cost averaging can make your wealth grow over time.

What this is going to do is teach children how to save and invest. If they learn to pay themselves first it will be a great lesson for life. Out of are pay checks they take taxes out we don’t have a say what can and can’t be taken out they go off of what the IRS tells them. If they learn that they need to set aside so much out of every pay check and save and invest then when they are older they will have some assets and investments to live off of in retirement. This will also teach them to live below there means.

I feel everyone can save and invest but it is living below your means, using coupons to buy items in the store. Watch for sales on the items you buy. My kids laugh at me because I always have toothpaste, toothbrushes, razors and other items in the house I find sales and buy these items on sale. My mother and father did it as I was growing up always using coupons and buying items on sale. My mother and father taught me to live below my means and to save and invest.

Some people say it can’t be done. I say yes it can you just have to learn how to do it and live below your means. Make a budget your kids can make a budget also on what they have coming in. And it doesn’t hurt that kids have to learn to save for things they want. We have people who want things now instead of saving for it first. Starting with small things will teach them on when they have bigger things to save for.

And another thing is teach them to save and invest then when they are older they be able to buy things off the income of what there investments are producing. An example will be they now have the income to afford a luxury automobile since they are making more income than what they did working at job because they learned to save and invest.

I personally think it is best to save at least 10% of your income and something I do is if I use coupons in which I do I take the savings I am saving on the coupons and invest that savings because it might be a few dollars but over time it can add up to over $100,000 you have saved and invested. Not only that I look for sales on what I have coupons for and make my list of what stores have the items on sale get my coupons out before hand and stick to my list. When I am shopping and in say a drug store or grocery store and see an item that wasn’t advertised on sale on sale I use my coupons to buy that item too since I am already using that item.

Teach your kids on how to shop to. My kids when they were growing up we would go and see my Mom and Dad and my Mom would take my kids shopping and say whatever you want in the mall in clothes we get for you. My kids walked the whole mall go to the sale and clearance items in the stores and get there outfits together that way. My kids had the discipline to look for sale items that it was just a habit for them to look for them. Plus they also enjoyed buying things this way. They got it from me which I learned from my parents.

Stocks are buying businesses that either can or can’t be profitable. I rather own stocks that the company is profitable that pay dividends and reinvest those dividends into more shares. When you reinvest the dividends this is called DRIP investing and DRIP investing will grow your wealth overtime.

In life we are always learning. When we are kids we are learning what life is going to be like yes things change but some of the basic things happen. As kids we are growing into adults as adults we are aging and one day we might not be able to work any longer because of retiring or health issues. So learning to invest and save is part of life and if we are able to save 10% when we are older we will be making more off investments than we did when we were working. And hopefully be able to live comfortable in are retirement years.

The main thing you need to teach your kids is save and invest to always put something back. My mom use to tell me to save something for a rainy day. There will always be something we want or something we need but we need to get in the habit of saving and investing.

There is nothing wrong with trying to save money and use coupons. If you start when you are young using coupons it becomes a way of life. I still clip coupons and look at the sale flyers. My daughter laughs at me because I always have extra shampoo, tooth paste, toothbrushes etc. And usually when she comes to visit she always goes home with a bunch of stuff that I got cheaply. I find it fun trying to save money. Not only that it lets me live