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Teaching my kids about money


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Teaching my kids about money

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I was reading a popular financial edutainment book a while back on kids and money, and one line stood out to me, "The wealthy teach their kids differently about money than middle-class people do."

And then the book goes on to say that this is the difference between assets and liabilities.

hmmmmmm. Ok.

That's certainly central, but there's a lot more to the curriculum, I think.

OK, so I want to teach my daughters ages 8 & 13 about money, and I want them to grow up to have a prosperous and abundant mindset with excellent money skills.

What do you think should I teach them about money? And how?

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suko View Post

OK, so I want to teach my daughters ages 8 & 13 about money, and I want them to grow up to have a prosperous and abundant mindset with excellent money skills.

What do you think should I teach them about money? And how?

you are very wise IMHO... your 13 year old may be tougher as they are becoming independent at that age but I would still try. Knowing your children are financially knowledgeable is a good feeling.

I talked about how I did it in another thread about teaching a child to trade but really that response belonged here. This is the link

https://futures.io/traders-hideout/27955-will-you-teach-your-kids-trade-2.html#post475147

It might require some thought to do this today as passbooks in banks are not common anymore but you will get the drift of what I did.

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you are very wise IMHO... your 13 year old may be tougher as they are becoming independent at that age but I would still try. Knowing your children are financially knowledgeable is a good feeling.

I talked about how I did it in another thread about teaching a child to trade but really that response belonged here. This is the link

https://futures.io/traders-hideout/27955-will-you-teach-your-kids-trade-2.html#post475147

It might require some thought to do this today as passbooks in banks are not common anymore but you will get the drift of what I did.

I was a teacher for many years, and the key thing about teaching, I found out, is creating engagement and motivation. Once the kids are motivated, the material teaches itself. You just present the material in some fashion, and they lap it up.

With the 13-year-old, I noticed awhile back that, when she was playing a video game on TV, an old RPG from the 90's, that she really lit up when she got to a section of the game that involved buying and selling and racking up the points score of virtual money. She really got a strong draft of enthusiasm there from that, and it got me thinking.

The eight-year-old has a much different personality, but similarly, I have seen engagement in screen games. We have one Mac game that's a kind of Sim Farm thing, involving parlaying your initial stake into a fortune by growing crops, then buying animals, milking them and shearing them, then buying more animals and so on. She will sit there and play that game for hours.

Similarly, I got to thinking about teaching them about money and trading after watching the eight-year-old play Monopoly. The thing that really got me about watching her (and she is very good at it) is how the trading psychology comes out in her once she gets her Monopoly money in hand. It's like flipping a switch. She's almost like a drunken caricature of a trader, beaming and boasting when she is winning, and fleeing the room in tears when she's losing.

Incidentally, these children are Japanese, so the language and culture involved is all Japanese. In Japan we still use bank passbooks, and since the children do not have bank accounts, that's one of the first things on the agenda. I may get them forex accounts at the bank, too, at the same time.

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suko View Post
I was a teacher for many years, and the key thing about teaching, I found out, is creating engagement and motivation. Once the kids are motivated, the material teaches itself. You just present the material in some fashion, and they lap it up.

With the 13-year-old, I noticed awhile back that, when she was playing a video game on TV, an old RPG from the 90's, that she really lit up when she got to a section of the game that involved buying and selling and racking up the points score of virtual money. She really got a strong draft of enthusiasm there from that, and it got me thinking.

The eight-year-old has a much different personality, but similarly, I have seen engagement in screen games. We have one Mac game that's a kind of Sim Farm thing, involving parlaying your initial stake into a fortune by growing crops, then buying animals, milking them and shearing them, then buying more animals and so on. She will sit there and play that game for hours.

Similarly, I got to thinking about teaching them about money and trading after watching the eight-year-old play Monopoly. The thing that really got me about watching her (and she is very good at it) is how the trading psychology comes out in her once she gets her Monopoly money in hand. It's like flipping a switch. She's almost like a drunken caricature of a trader, beaming and boasting when she is winning, and fleeing the room in tears when she's losing.

Incidentally, these children are Japanese, so the language and culture involved is all Japanese. In Japan we still use bank passbooks, and since the children do not have bank accounts, that's one of the first things on the agenda. I may get them forex accounts at the bank, too, at the same time.

I am not so sure that teaching trading at such a young age is best...after all let us say they take a real interest...they cannot legally trade for many many years.

However...being responsible with respect to money is another matter. I think that comes first... trading can be done at any time but if they do not show respect for money then you have not established a foundation to build on.

Playing the video games is fine and fun. When I was home from a trip or late in the evening I would play video games with my son for an hour or two. They were basically challenging puzzles...I stayed away from killing games.

We had one basic rule: we would alternate play of the game and the other person could not offer hints on how to solve the puzzle but could watch and learn from the mistakes of the other.

It worked very well. Some of the puzzles were really hard and I would think about them as I went on a sales trip, coming back with new ideas to solve the puzzle only to be greeted by an excited 8-11 year old who said they solved the puzzle or found a better way to solve the last puzzle... damn!! I wanted to solve that puzzle

Interacting with your children this way makes life when they are teens flow much better.

Fiscal responsibility first...trading a distant second IMHO

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We made great sacrifices to send the kids to Montessori school. I am not sure that I drink the Montessori Koolaid in one gulp, but there are certain things about it that are very valuable. One thing is the emphasis on learning to do real things.

For instance cooking. Our kids were taught to cook starting at age three. As a parent, it's kind of shocking the first time you see your three year old with a sharp knife in her hand prepping kitchen vegetables. But of course she can do it, and without cutting off a finger. As a result I now have an eight-year-old that can plan, purchase and cook dinner for us unassisted.

I don't want to put too much emphasis on the word "trading" in this thread. In any event the screen trading that we adults do can come later, if at all. For the time being, and there are a lot of teachable moments concerning money that can be seen just from the environment.

For one thing, the kids are going to Amsterdam for Spring Break. This will be a very good opportunity to get a taste of forex and spreads. Other teachable moments would be the question of whether travel insurance is a good idea, why airfares fluctuate seasonally, and whether there is any arbitrage to be gained between the price of tulip bulbs in Holland and Japan.

And speaking of tulip bulbs...

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I have decided to turn the trip by the kids to Holland this spring into a money learning project.

So I am working on a little learning experience for them called "Tulipmania."

Reading up on the subject right now. It turns out that there are a whole bunch of interesting topics to be introduced under Tulipmania, in addition to the obvious ones of financial bubble and irrational exuberance.

One thing I did not realize about Tulipmania is that the problem was primarily a matter of futures trading. Another thing introduced during that period was options trading. Furthermore, short selling played a part. This is very juicy.

As a barter currency, the tulip itself has an interesting character, due its very limited propagation characteristics. It takes, for instance, 7 years for a mother bulb to mature, and it does not divide into very many daughter bulbs. It's a semi-hard currency.

One thing that might be fun would be to create a board game called "Tulipmania". Maybe use the format of the "Life" game.

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suko View Post
Reading up on the subject right now. It turns out that there are a whole bunch of interesting topics to be introduced under Tulipmania, in addition to the obvious ones of financial bubble and irrational exuberance.

One thing I did not realize about Tulipmania is that the problem was primarily a matter of futures trading. Another thing introduced during that period was options trading. Furthermore, short selling played a part. This is very juicy.

Today it is not more than junk future.
But with a very long history!
Have a great time in the tulip parcs.

GFIs1

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Today it is not more than junk future.
But with a very long history!

GFIs1

Sorry, I couldn't parse that.

Are you saying that there is nowadays a tulip bulb futures market in Holland?

It would make sense for there to be one, since they produce 9 billion bulbs per year.

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Are you saying that there is nowadays a tulip bulb futures market in Holland?

It would make sense for there to be one, since they produce 9 billion bulbs per year.

Some pretty amazing scenes from the Dutch flower auctions of FloraHolland in this vid:


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suko View Post
Are you saying that there is nowadays a tulip bulb futures market in Holland?

It would make sense for there to be one, since they produce 9 billion bulbs per year.

I was only mentioning that the PRICE of the tulips after the hype in the past today is nearly zero...
And the "future in form of the tulip" does no longer exist.
But today it is a very big business to market them in the auctions every day - as you showed
in the next post. You can follow them live on the internet. You see rows of carts with tulips
coming in. Traders up in the rows are bidding within seconds for one ore several carts.
And the next carts are coming in - the outgoing are directly steered to the cargo airport beneath.
If you can - visit such an auction house to see it live!

GFIs1

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GFIs1 View Post
I was only mentioning that the PRICE of the tulips after the hype in the past today is nearly zero...
And the "future in form of the tulip" does no longer exist.
But today it is a very big business to market them in the auctions every day - as you showed
in the next post. You can follow them live on the internet. You see rows of carts with tulips
coming in. Traders up in the rows are bidding within seconds for one ore several carts.
And the next carts are coming in - the outgoing are directly steered to the cargo airport beneath.
If you can - visit such an auction house to see it live!
GFIs1

At the risk of violating the "off topic" rule of this forum:

From the Wikipedia Tulipmania story, the price of the underlying tulip bulb was not as volatile as we think. The shocking volatility occurred in price action of complex derivatives during the after-market, so to speak (the winter months when the cash market in tulip bulbs was closed). A violent spike in the future/options market based on sellside insider info and buyside rumors pending a big announcement. Sounds familiar.

By "complex derivatives," what you had was a straight futures contract that (was expected to be modified by regulators to) morphed into being convertible into an options contract. Fear, uncertainty, anticipation, doubt.

Futures convertible to options

So once the market heard in Nov. 1636 the rumors that futures contracts after Dec. 1 might be convertible into options contracts at an as-yet undetermined premium, Vol, which was already sky-high, went supernova. IV expansion around a binary political event, which was the formal announcement of convertibility to options in February 1637, at an as yet undetermined conversion price. It looks like options were already trading before the announcement or traders had gone ahead and started deeming their futures contracts to be options contracts in anticipation.

After the binary event, there was massive post-supernova Vol Crush. Call options buyers ended up repaying premium to the sellers decades later.



Moral of the story: if you are going to trade options around a binary event, sell premium

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I have my my life goals organized and tracked on an Excel spread sheet. Spending time with the kids is #1 priority. My wife usually monopolizes them, but yesterday I got a few good hours in with my eight-year-old.

We spent some time talking about tulips and watching the tulip trading video above. She is very excited about the idea of my Tulipmania game proposal. I told her to come up with some ideas on how to structure the game.

Since they are going to Holland at the end of the month, I brought up the EURJPY cross rate chart and we studied it. We will be following this chart with anticipation as the month unfolds. I am sure that ever after in her life she will recall what the EURJPY chart looked like in March, 2015.

Then she kinda shocked me by asking me out of the blue how AAPL was doing.

I showed her the position I have on in the TOS Papertrader, and then she crowded right in there and brought up the chart in TOS. She was a little surprised that the P/L on the AAPL position could be up on the day even though AAPL was down. She's a numbers girl, and she's not the slightest bit intimidated by the TOS interface.

Then I did a kind of lousy job of explaining the meaning of "karauri" in Japanese to her (short selling). Anyway, she's smart and she gets the idea. "Market goes up, we make money, market goes down, we make money." I need to work on the delivery of that, but honestly, I lack the expressive ability in Japanese to explain hard concepts like this in simple terms that an eight-year-old can grasp. I also lack a perfect understanding of where she is intellectually, what concepts she is at home with. Later on, I spent hours and hours on Amazon Japan going through their books on related subjects. I really need to power up my Japanese with the terminology and expressions that can explain all this stuff. Nothing I like better than talking markets in Japanese, but I often stumble because I don't have the terminology.

One thing I learned from perusing the Amazon booklist is the work for "scalping" in Japanese, "sukyarupingu." Another takeaway is the knowledge that there is a whole bunch of manga books in Japanese on markets related topics, especially manga illustrated lives of heroes like Warren Buffett and Jesse Livermore. Time well spent.

Below is a page called "Marital Disputes" from a manga on Trading Psychology that I bought. Frame #3 shows the poor hapless guy explaining to his wife in bed that he just lost a million yen in the market that day. The final word on the page is "Divorce!"


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Progress on the teaching kids about money project. Both kids now have bank accounts and brokerage accounts, which have been funded with a couple thousand dollars. We are using the SBI platform, which is the favored platform in Japan with daytraders. Haven't made any trades yet.

The proposed stock strategy is to buy a 1) nominal amount of shares in some company that has a retail presence that affects the kids in their daily life. Starbucks would be the obvious one. Apple another. Still thinking. 2) core strategy will
be Vol products, and the purpose here will be to make some money. I discovered that Nomura has localized XIV for trading on the TSE under the symbol of 2049.T

Anyway, all of the above will work for the 13 year old, who now thinks very abstractly. For the soon-to-be nine year old, it's a different matter.

I think we need to start out more concretely, so with this coming birthday we are going to start collecting silver coins. Well, a coin collection. I don't really know anything about coin collecting, but my father always collected silver coins out in the wild, and he passed on his collection of coins to me, among all the children, for some reason. Ever since I received the collection, I had been wondering what to do with it.

Now I know. This is a teachable moment for us all.

As a birthday present, I got the nine-year-old a 1 ounce silver eagle dollar, since the child is American and we might as well reinforce the American identity. The silver eagle is actually a very beautiful object, and it's heavy and gives you a real sense of existence.

This is MONEY, there is no mistake about it. It's not just a bunch of zeroes on a spreadsheet.


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We did very well trading the vol products during July and August, deftly avoided the crash then went long. The teaching strategy is just start off with the most risky high-alpha vol trades.

I am staring at the UVXY chart the other day at 83 or something, and the nine year old walks into the room and says, off hand, in Japanese, "You don't want to be shorting UVXY at this moment." Yes, dear.

I've found that the Futures chart on Finviz is the best graphical representation for market awareness. The good thing about it is that there are a lot of very concrete items on there that would appeal to a nine year old girl. Cocoa, Sugar, Milk.

We were toying with the idea of putting on a "hot cocoa" spread on the TOS Papertrader. But no milk on TOS. WTF, so I fire off an email to Pete Mulmat and I find out that there is just not enough volume of milk to trade futures.

This does not make much sense to the nine year old. After all, there is orange juice on TOS. Do Americans drink that much more orange juice than milk?

The nine year old is interested in silver. I tell her we are could take 20% of the profits from trading at the end of the year and buy some real silver coins. Since the PL numbers are pretty abstract, I try to express them in stacks of silver coins. Right now one silver eagle is about 2600 yen. She tells me she would actually rather have an iPad Mini.


Recently, I started using Bitcoin for doing international money transfers. My local Bitcoin exchange is hooked right into the banking system and I can trade bitcoin, litecoin, and dogecoin. The trading platform shows the order book and makes it very easy to learn about the bid/ask system for currency, and to see the effects of liquidity.

Since we have a Shiba dog, the nine year old is very interested in Dogecoin, which is a coin that was for some reason named after last year's cute shiba dog Internet meme. One beautiful thing about Dogecoin is that you can really, really TRADE SMALL, since the current price is 0.018 JPY. So, we can trade a single coin if we want, and the nine year old sees no need to own more than one coin. Well OK.

It's skin in the game, right?

It's actually a good study in the nature of liquidity, because the Dogecoin market is so illiquid.

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My Kids Money Project has been running for about a year. I am now shopping for the second silver coin to be presented to the younger as a birthday present. Maybe a Panda this time.

The kids' trading accounts have been active for 11 months. In the 14 year old girl's account, we have only swing traded XIV and VXX, along with some intraday Nikkei index ETFs. As expected, in terms of PL the account has done well. But given the totally abstract nature of volatility products and index ETFs, this style of trading is not as engaging as a traditional product like DIS. So, we sold our position in XIV on Friday and now I think I want to mix it up some, now that we have some house money in the account, by getting some DIS around the release of their new Nemo sequel.

I told the kids they could draw out 20 percent of the gains on their trading accounts and spend on whatever they like. I think it is important to try and make it real and for them to take some of the house money off the table. So, once we got up money on this last trade, the girl took her first draw and bought a new bicycyle. I merely drove the car to the bank and the bike shop, she had handled everything else.

Including the question of whether to purchase the extended warranty on the bicycle and also the liability insurance, which is now said to be compulsory (only not really compulsory as she soon found out). This was a teaching moment, but it slipped by. I didn't comment on whether I thought she should purchase either option.

In reflection on this past year, with the older child, I feel my efforts have been a mixed success. The level of engagement is not as high as I hoped, but OTOH as a father of a teenage daughter, I guess I should just be happy that she will talk with me at all, right?

I think she did grasp the point that by "investing" her money it's possible to get a tangible return that is much greater than leaving it in her bank account at 0.001% interest.

And she did experience the pain of a drawdown.

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We have been reviewing the results of trading the first year in the kids accounts.

In the process I discovered that they do not understand the concept of compounding returns.

Somehow this gets overlooked in the Japanese school system, although they do rigorously learn some very hard math through the end of high school. Just looking at the homework makes my head hurt.

So now I have to figure out the best way to teach this concept. It's one of the most important things you can learn about money in your life, whether as a saver or debtor.

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So now I have to figure out the best way to teach this concept. It's one of the most important things you can learn about money in your life, whether as a saver or debtor.

This might help ....


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Thanks, that gives me some ideas.

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I think it's great you are teaching your kids important lessons like these.

One thing I was always grateful for (not at the time though) was that my parents always made me work during the summer when I was young, including hard labour. They had both grown up pretty poor but had risen to the middle classes and didn't want me to grow up spoilt. From the age of 15 I was made to work at least 4 weeks of my summer holidays at their friend's construction site as a labourer doing all the grunt work. I hated it and it was really hard work but I really appreciated how hard it was to earn money for stuff such as a games console or holiday with friends. As the years went on I learnt to be a good painter and decorator and other handy skills which has helped me when painting my own flat etc.

But out of all the jobs I did whilst young, the most important lesson I learnt was respect for others. Seeing how hard people work day in, day out was eye-opening. I would do 4 week stints and be absolutely drained. I couldn't imagine doing that for 50 weeks of the year! Nowadays I may wear a suit and work in a nice office but I always show respect to everyone, no matter if it's the barista serving me coffee or the cleaning lady in the office. I't sad that often the most senior staff will act ignorantly and treat those same people with no respect or dignity which always pisses me off.

Teaching your children about trading is great, but it can be quite a surreal environment in terms of money moving around so quickly - it can often feel fake. I'd suggest some tough work involving long hours too to balance out their education. Just my two cents though - sorry for the essay.

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I also did a lot of hard labor as a teenager on farms, $20 a day. Happy to get it.

Later on, after I finished college I ended up doing construction again -- painting, cabinetmaking, carpentry and so forth. Started a business. It was very tough but also enjoyable. Started at $30 per day.

Nowadays my wife and I have a business that we run out of home, over the kitchen table. The kids are constantly exposed to business discussions about clients, bids, rates, business practices, and so forth. Our work takes us behind the scenes in a lot of enterprises, so the kids are exposed to a lot of what goes on in the business world through us, and sometimes we put them to work in the business, at an hourly rate.

They also make money around the house by cleaning windows and so forth. They are very proud of this hard-earned money. The trading earnings they seem to be indifferent to.

They money they get from their maternal grandparents as gifts, plus allowance, which is conditional on chores, plus window washing money all goes into account A.

The money from the paternal grandparents, the trading capital, is in account B.

They make a clear distinction between the value of money A and money B. It's as though money A is real and money B is unreal. It's as though A is "Hard Work Money" and B is "Money for Nothing." For instance, they would not risk any of the money in A by investing it in B.

If I hadn't read the great little book "Why Smart People Make Big Money Mistakes and How to Correct Them" I would not have indentified this distinguishing between A and B as the fallacy of "mental accounting" -- basically the idea that there is such a thing as "house money." In reality, there is no "house money" or "savings" or "capital" and there is no difference between A and B.

It's all money just the same. If you regard gift money or house money as something of lesser or different value than the money you earned washing windows, then you will be more inclined to waste it.

The question of how we address this fallacy as a teaching point, would be a good one. It's difficult, because I suffer from it myself, as we all do.

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This is a double edged sword in my opinion.

We don't want our children to be money oriented. We want them to be happy. Still we don't want them to be ignorant of money issues.

But when to start? I'd like my children to not worry about money, even conceptually but to grow up and build their desires based on what they like to do, not what earns the most.

Saying that, I had a discussion with my son the other day about what he wanted to do. He wants to teach guitar. So we went through the number of students he could deal with, how much he could charge each student, how much he could make each month.

Then we compared that with how much he currently costs me.

He is now looking at other ideas.

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Money is energy, and options, and freedom and creativity.

Gasoline for the tank.

That's the kind of positive view I am trying to encourage.

Rather than the deepset cultural message in this country that money is a dirty thing that only the money-grubbing lower merchant class is interested in. And this is a very deepset attitude on the maternal family side in our family. They are extremely dumb, slooooow money and very proud of it. Very typical mindset.

If you take that attitude you can end up economic roadkill, in my view.

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There was an idea I had come up with a couple of years ago regarding the value of real-life money as compared to virtual currency, and it had to do with staying away from spending real-life money on a virtual game, like everything on FB for example. Maybe it will work for the OP, I am not sure, but it basically went down like this...

You get your kid(s) a jelly jar. Every time they wanted to spend a dollar on the virtual thing (game or whatever it was), they would bite down hard on their bit and do without the virtual thing and instead take the physical dollar from their pocket and put it into the jelly jar.

After a few months, look at how much money is in that jelly jar. It is eye-opening!

(I suppose this would apply mostly to kids (and adults) who are addicted to paying for virtual online crap, which has zero value in the real-world. But I reckon' it can also somehow be adapted and applied to teaching youngsters the value of money.)

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But I thought in some cases the online game virtual currency could be traded for the real thing.

I will say this much, when money and currency is gamified to the level of sugary deliciousness of an online game, my kids are super engaged. Whereas they are totally "meh" over actual trading.

Take some concept entity and tart it up with cute graphics and they go wild over it. Same with the wife.

I am quite sure that if I gave them the choice of playing a game with cute graphics for an hour to win 100 units of worthless virtual money vs. trading at a Unixoid looking interface like IB for an hour to gain $100, they would choose the cute worthless game route.

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But I thought in some cases the online game virtual currency could be traded for the real thing.

I will say this much, when money and currency is gamified to the level of sugary deliciousness of an online game, my kids are super engaged. Whereas they are totally "meh" over actual trading.

Take some concept entity and tart it up with cute graphics and they go wild over it. Same with the wife.

I am quite sure that if I gave them the choice of playing a game with cute graphics for an hour to win 100 units of worthless virtual money vs. trading at a Unixoid looking interface like IB for an hour to gain $100, they would choose the cute worthless game route.

I think my point was askew from the query of the original post...My bad. I think I was beginning to rant about wasting real money on virtual junk, whereas in trading we are spending real money on what looks like a virtual "game".

Sorry for the confusion, I am bloody tired.

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No, I think you highlight the confusion that we all suffer from as money gets virtualized.

Blinking lights on a screen.

This is one of the reasons why I started silver stacking with the kids. A silver coin least is real money and tangible.

In a way, this is why games like Monopoly are so much fun, physically passing the money around and arranging it and so forth.

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No, I think you highlight the confusion that we all suffer from as money gets virtualized.

Blinking lights on a screen.

This is one of the reasons why I started silver stacking with the kids. A silver coin least is real money and tangible.

In a way, this is why games like Monopoly are so much fun, physically passing the money around and arranging it and so forth.

OK, how's this for teaching kids the value of money?

Ever hear the phrase, "If you see a penny pick it up"?

Well, calculate it. It takes an average human two seconds to see a penny and pick it up.

That's $.30 per minute @ 2 seconds per penny. That comes out to $18 per hour picking up pennies. $720 tax free on a 40-hour work week of picking up pennies.

So each time your kids see a penny and pick it up, tell them they are earning $18 per hour. Once they get a boat-load of pennies in their jelly-jar, ask them to count what is in the jar and see how much they have. They will be surprised, for it certainly shocked the hell out of me when I calculated how much actual work I did to make $18 for that hour of nil labor. Beats working at Burger King!

Does that make sense? Sorry, I am very tired and need sleep.

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I do always set the example by picking up pennies, it's a basic matter of morality, I feel.

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I do always set the example by picking up pennies, it's a basic matter of morality, I feel.

My younger daughter has her tenth birthday coming up this week.

This year we decided to get her an Australian Kangaroo silver coin. This is a one ounce coin, and the list price was about 3450 yen. This is nearly the same amount as we paid for the Liberty dollar last year, and meanwhile silver has gone way up in dollar terms. We usually look at the silver futures prices on the Finviz Futures page, but I need to figure out how to chart a spread on TOS so that we can look at or better yet track the progress of /SI and /6J.

The younger girl has a completely different brain from her elder sister's. She works hard to get money at odd jobs around the house and is a very careful saver, all transactions recorded in her notebook. When we set up her trading account I got the bank to give me a huge envelope full of large denomination bills in cash and had her count them. She counted them twice, carefully. (this is in contrast to her sister, who wanted to get away with visually inspecting the bills without counting them).

We are coming up on the first year anniversary of trading her account. She is up money but has shown no interest in drawing her 20% in earnings out to spend, preferring to leave the money in the account, even though I know she desperately wants a computer or an iPad and even though she has been told she can draw from the account to get it. This is an encouraging sign of a bit of a delayed gratification mentality.

I think I will go again to the bank and get the year's earnings money out in cash and make her count it. Make it real. This is something Jesse Livermore used to do. He would get his friendly banker lock him up in the vault over the weekend with his earnings for the year plus his trade journal so he could get a real sense of and reflect on what he had accomplished.

I would like to set up an exercise in which we calculate the hypothetical effect of drawing out 20% per year as opposed leaving it in the account, in terms of compound returns over time. The price of that iPad she delays purchasing this year could turn into the price of a car by the time she is an adult.

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I was a teacher for many years, and the key thing about teaching, I found out, is creating engagement and motivation. Once the kids are motivated, the material teaches itself. You just present the material in some fashion, and they lap it up.

Ken Robinson, if you know the name, says that all children are naturally curious. If you leave a child on their own they will naturally learn about their environment. I think you're right in saying that teaching is about engaging the children. Something not many teachers do, in my experience.

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start with compounding value and lead into money management using portfolios, risk/reward, logging their actions and finally mental discipline. If you actually go into trading then that is a another discussion altogether. if you cant get past the compounding subject then restart until they get it. I'm just saying.

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start with compounding value and lead into money management using portfolios, risk/reward, logging their actions and finally mental discipline. If you actually go into trading then that is a another discussion altogether. if you cant get past the compounding subject then restart until they get it. I'm just saying.

It's taken me a year into this project to realize that understanding compounding is the key.

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It's taken me a year into this project to realize that understanding compounding is the key.

Well suko, it's like what you posted above...

"We are coming up on the first year anniversary of trading her account. She is up money but has shown no interest in drawing her 20% in earnings out to spend, preferring to leave the money in the account, even though I know she desperately wants a computer or an iPad and even though she has been told she can draw from the account to get it. This is an encouraging sign of a bit of a delayed gratification mentality."

That reads to me that your daughter knows the power of compounding interest. Smart moves for a bright lass, so admirable.

If I was as smart/prudent as your kiddo, when I was her age, I'd be way better off at this point. Heck, I suspect many of us would be.

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They tell the story that in the old days in Osaka the merchant families would set a young male child down on the tatami and place a candy in front of him, slightly to the left, an abacus to the right. If the child went right for the candy, they would ship him out to apprentice at some other place. If he went for the abacus, they would keep him at home and groom him to carry on the family business.

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Brexit was the subject of dinner table conversation. We usually do not talk current events or politics at dinner, but the older girl is getting a lot of input on these things at school, so it is becoming more possible to do so.

We talked about the drop in the Pound and then the rise in the Yen. So we asked her why would the Yen rise when the Pound falls, and then why would the Japanese stock exchange fall when the Yen rises? She came up with answers based on historical associations.

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Another dinner table conversation.

It started out as a discussion of realistic expectations for what an entry level worker can spend per month, fresh out of college. I pointed out that the really rad cars a lot of young guys are driving actually consume more than half of their disposable monthly income.

Then I told about the first thing my father ever said to me about money: "The minute you drive a new car off the lot, it loses 10% of its value."

That was a shocking idea when I first heard it. The children were shocked by it last night too. It seems unfair.

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I *wish* I was raised by a family that wanted their kid to be financially free in a wise and fair way. Here I am 3 decades later waking up and noticing how behind I am. Imagine the kids are thought from a young age to save and trade for long term without relying on the services provided by corporations and institutions and/or the idea of retiring. Good job Suko!

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Yes, it's very important.

This year we are working on recordkeeping and learning how to deal with numbers in spreadsheets.

I started working with the younger one in Apple Numbers. She gets it immediately.

Eventually she will necessarily graduate to Excel.

But for now this program is user friendly and makes it easy to create graphics and charts to visualize the data.

One thing I want to do with the spreadsheet is help her visualize scenarios such as the impact of taking money off the table on compounded returns.

She wants to draw on some of her trading capital and use it to buy a computer.

I think this is a bad idea.

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Yes, it's very important.

This year we are working on recordkeeping and learning how to deal with numbers in spreadsheets.

I started working with the younger one in Apple Numbers. She gets it immediately.

Eventually she will necessarily graduate to Excel.

But for now this program is user friendly and makes it easy to create graphics and charts to visualize the data.

One thing I want to do with the spreadsheet is help her visualize scenarios such as the impact of taking money off the table on compounded returns.

She wants to draw on some of her trading capital and use it to buy a computer.

I think this is a bad idea.

Why not propose that rather than drawing on principal, to draw on dividends, interest, capital appreciation. Then maybe the parents can match the draw against the earnings.

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Actually, she has been given the right to draw 20% of her earnings.

I want to hammer home the point that if she leaves that 20% as long as possible the money will grow much bigger.

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So we had some heartwarming dinner table conversation the other day.

Daughter: "I traded soybeans and wheat last year now where's my money?"

Me: "You didn't make any money on the beans and wheat, only on short vol, remember?"

Silence.

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We moved the younger daughter's trading account to Tastyworks in November. She is now 11.

I directed her in making the first trade, which was a UVXY 50d30d put spread. Closed as a winnner.

Most of the other trades since then have been like that. We have also been doing a similiar vertical short TBT, which has been a big winner. And we actually had a conversation about interest rates and government bonds in the car on the way to swimming practice. She cannot understand why the Japanese bond prices are so much lower than the US.

Neither can I.


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