Monthly Archives: December 2015
Blog – Wed 25.11.2015: Money Skills for Young Adults (Part 1)
My oldest son just got his HSC, just about to start his studies, and is becoming a young adult. There are another three to grow up to this stage and I tend to compare notes with other families and we often discuss how I raise my kids with regards to money and finance (given that I am in the industry). Below are a few thoughts I tend to share with my kids and their friends and their parents. All in no particular order:
Probably one of the hardest ones for a young adult to get his head around. They tend to live for the moment, are bullet proof, will never die and very often do not think too much of the future. I usually start with discussing life expectancy from birth (these days 82 for males, 84 for females) and try to instil the idea that we have to arrange out financial affairs in order to have the highest utility over our entire life. This then usually involves holding back with some consumption today in order to be better off tomorrow. I have good success if we use compound interest tables.
Blog – Wed 18.11.2015: Panic on bad news!
You bought this wonderful stock that is supposed to outperform the market. It hasn’t done much recently, probably a bit in a trading range. The 200 day moving average is by now flat and the share price trades occasionally below this moving average. And then a bad piece of news comes out and the market overreacts. The stock drops by 10 % or more on very high volume. You are upset: How inefficient markets really are! You read the news, the reason for the price fall.