How To Turn Your Girl Scout or Cub Scout Into A Stock Scout And Smart Money Manager

Some tips to pass on: 

1. Learn everything there is to learn about income tax.  Money management starts there
2. Start contributing to tax sheltered accounts (IRAs) as soon as you start earning an income
3. Maximize your contributions to retirement plans - IRAs, 401K when you are in a regular job
4. If you get 1099 income for any side or contract work, open a SEP IRA or Solo 401K and maximize your contribution
5. Have an emergency cushion to carry you during the gaps between jobs
6. Spend as little as possible on depreciating assets such as cars, gadgets, and gizmos
7. Spend less than you earn
8. Try to save 20% of your income every month
9. Pay your credit card in full every month
10. Avoid bank fees by maintaining the required minimum balance, not over-drawing, not having bounced checks, using your own bank’s atms (unless your bank refunds the atm fee when you use another bank's atm)
11. Have money in a checking account as well as a savings account
12. Negotiate when you buy big-ticket items
13. Negotiate your salary and what you charge for what you do
14. Read books about investments and money management; if you don't like reading, find podcasts and you tube videos and listen to them or watch them
15. Familiarize yourself with the law regarding loans, debt and other financial obligations
16. Build up good credit as early as possible, so you can benefit from the best lending rates when you need to borrow money from a bank or lending institution, whether to buy a car, a house, or a household appliance, or even to get the best credit card offers
17. Familiarize yourself with what makes up FICO scores, get your free FICO score every year and study it
18. Make sure you know all the different options, costs and coverage when buying insurance, whether health insurance, car insurance, life insurance, home insurance - including the impacts of making a claim
19. Understand the full impacts and the penalties (if applicable) of withdrawing money from a tax-sheltered account
20. The time to take risks is when you are young, because you have time to recover from your losses.  However all your risks should be calculated risks. You should think about what's the best that could happen and what's the worst that could happen
21. Take small risks. Don't bet the farm
22. Diversify your investments, not just across different industries and geographic regions, but between different assets - real estate, stocks, bonds
23. Keep investing costs low. For example, when you buy stocks, buy low cost index funds such as those offered by Vanguard
24. Invest in life strategy funds (offered by all mutual fund companies such as Vanguard), because they will automatically adjust your allocation between different assets based on your age
25. Use the tools offered by mutual funds companies and brokers to assess your risk tolerance and invest according to your goal horizon

Stock-specific advice:

1. Diversify across different companies and different industries and different geographies. Buy a basket of stocks, or invest in a mutual fund tied to a broad index like the S&P500.  Vanguard has several
2. Don't day trade (if you do want to become a trader, educate yourself - find resources online such as Brett Steenbarger)
3. Don't try to time the market.  Time in market is more important than timing the market
4. Don't panic in times of market crashes.  Sit on your hands
5. Don't buy IPOs unless you get the stock at the IPO price
6. Do some DRIP investing, so you buy less when the price rises and more when the price drops.  Check out Sharebuilder, Computershare to see how you can do this
7. Invest in Life Strategy funds offered by Vanguard, or other mutual fund companies.  They will adjust your investments between stocks and bonds according to your age, goal horizons and risk preferences
8. Don't buy any stocks based on a tip.  If you do buy, devote just a small amount of money to it
9. Invest in stocks in your taxable accounts and invest in bonds and cds in your tax-sheltered accounts
10. If you are burned by an investment, don't make it scare you away from investments for life.  Learn from your mistakes and move on
11. There should never be a point in time when you are completely out of the market.  You may miss the big ‘up’ days
12. Understand stock splits, including reverse splits - why they are done and what is the impact
13. Know that there is a difference between a stock that has a high price, but may still be cheap - Google at $798 per share and a stock that has a low price, but may be expensive - Xerox at $7.13 a share
14. Include in your portfolio some dividend paying companies and reinvest the dividends - you can select this option in the ‘manage your accounts’ section of the broker's website.
15. Always keep some money out of the market, so you stay liquid and also have money for a good opportunity
16. Stay optimistic when the market crashes.  Sometimes you may have to stay optimistic for several years.  Stocks recovered from the 2007 crash only in 2014.
17. Fear, greed, sloth and ignorance are the 4 enemies of financial wisdom.  Conquer these and you will do great.

Best wishes from me to you and wishing you a stable, solid financial future. Happy Father's Day to all the fathers reading this post. Enjoy your day.