What investment advice to give a 19 year old?

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SP500 fund when that seems too risky

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You think an S&P Index Fund is too risky?

FXAIX and forget about it.

My dad always hammered home the importance of "saving money' but it never stuck because he never walked through the math of what saving 5k per year would do for me with growth 30 years from then. I was a financial imbecile all through my 20's and didn't realize the future money I was pissing away on nothing.

So if anything, sit him down, explain growth and dividends. Show him the actual math on what it would mean to save 5k per year and have that grow for 40 years. I never got that and it took me years to start saving because of it. If I had seen what life could be now, I'd be fundamentally different.

So educate him on that and the dots will start to connect much faster. Find some Dave Ramsey clips where someone calls in at 50 with no savings.

Don’t get anybody pregnant.

Fidelity offers a program for teens. They even throw the first $100 into their account for free. I got my daughter in when she was 15. It functions both as a savings, checking and brokerage account. She works at a local Publix and has her checks deposited into the account.

Her savings go into SPAXX which currently yields 4%+. It comes with a debit card which gives her a reward for each use and allows them to experience budgeting and financial independence.

More importantly; as the parent I can access the account and see where she’s spending and counsel when needed. It’s hers free and clear; at age 18 I will no longer be able to see the account.

Early on I convinced her to put some money in the market. Told her to choose something she believes in and buy some shares. She chose Lululemon because teenage girl. LOL.

She got in near the top and a stop loss kept her from bleeding too much. She learned a valuable lesson about diversification. Now she’s all in on VTI. She proudly boasts about her “portfolio” and that it’s made her a few grand over the years.

Investing is an endurance race. The earlier you start the better. Buy now and then buy more. Repeat.

The power of compounding isn’t driven into kids as it should be. Less is typically more. Chasing individual stocks seldom works as well as Indexing.

If I had a Time Machine this is what I’d go back and tell my teenage self. Buy a S&P Index fund and keep buying whenever you can; no matter how small. Max out your 401K and/or Roth every year. The studies couldn’t be more clear; people who start early and even stop contributing for extended periods arrive to the finish line better off than people who start late and throw piles of money in. The power of compounding is that profound.

Is he eligible for a Roth IRA?

If he puts it into a Roth IRA, in later years can he take out his own contributions without penalty if he is in a bind?

Get that roth going at 19 baw. Pretty insane how much of a difference starting at 19 can make

Roth IRA.

I think the rules allow monies to be used for house down payment.

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Don’t get anybody pregnant.

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Or married too young. Young women can be vampire to your bank account and soul.

No matter how much she professes that she loves you, there is probably a body count a mile long of heart break and innuendo.

I am trying to work through these conversations with my 29-year-old niece, who is just getting established in her career and starting to make money. She has a lot of free cash flow and is interested in guidance.

I like the detailed math conversations and compounding interest, etc. But the more challenging part of the conversation for me is how to guide her while she sets her goals. Car expenses, possible house, currently returned for her second Master's, etc.

While at 58, I feel like I can see the future, from her 29-year-old perspective, she has to value the concept of having money to retire, buy a house, etc.

The conversation starts with getting anyone to the point where they can see many of the more significant financial decisions they will face in their lifetime. Then, they can begin to prioritize them. It is tough to provide appropriate guidance without clarity about their time horizons or what the investment or money is earmarked for.

For example, a conversation about keeping your cash flow needs lower while increasing income and how that affects your emergency fund or even what is an emergency vs. need that can be handled by free cash flow is a longer-term multi-conversation topic.

You might work on finding material that helps him better understand addressing specific or pathway needs like Retirement, Emergency funds, possibly real estate investments, living within one's means, etc.

I am sharing details about the decisions that have worked for me and why, including retirement investing, emergency funds, vehicles, etc, but doing it in a way that leaves her with the decision about how she wants to approach it for her circumstances.

I don't see her too often, but in the year, she has shuffled some non-interest-earning savings into an HYS account and re-prioritized some spending choices (she wants to travel, but her budget seemed a little high compared to other needs she has). She has learned how much she had in a prior retirement account and has started saving 20% in her current employer's 401 k, so she is taking some essential steps, including becoming organized and informed about what she really does and does not have in place.

Keep in mind that if this conversation with your son lasts a year while he begins to learn about these topics and makes decisions that will help him 40 years from now when he is 59, it will be of amazing benefit to him.