While you eat your broccoli, ask your parents:
“How old were you two 30 years ago?”
Chances are they were about your age.
Now show them the chart. It tracks what $10,000 in 1996 would be worth today if you’d invested it in different things.
Left in cash it becomes $32,459.
Put into Aussie shares, it becomes $132,931.
The difference? A hundred grand!
“But what if we invest and it crashes like your uncle Derrick is always warning about?” they’ll ask.
Great question. Let’s play a game.
Imagine you’re the unluckiest investor in the country. Vanguard actually ran the numbers on this.
You invest $10,000 into a mix of local and global index funds … right before the dot-com crash.
Another $10,000 … right before the Global Financial Crisis.
And the last $10,000 … right before Covid hits.
Every time, you buy at the absolute peak. Thirty grand at the three worst moments in a generation.
So how did you do?
Today it’s worth $117,000.
Yet if you kept it in cash it would only be worth $54,000.
(And let’s be honest, most of that cash would have disappeared on holidays, renovations, and “just this once” spending.)
The worst-timed investor in Australia still doubled the one who “played it safe”.
Yes, things went wrong. Covid. Dot-com. The GFC. Uncle Derrick will keep warning you about the next disaster until the day he dies. The trick is to look at what quietly went right.
You’ve done three things. You taught your parents something. You learned the best way to learn anything… by teaching it. And you flicked on the most powerful force in the universe: compound interest.
Google “Aussie investing apps for kids”, then get your parents to download one and buy some shares (called index funds) for you. You can start with as little as $5. And remind your parents they can invest some of their money too! Why should you have all the fun?
Before you ask to leave the table, ask one last question to make your parents squirm.
“How old will you be in 30 years?”
You’ll be 38, Molly. Wealthy. And only just getting started.
Your parents?
They’ll be pushing 70… still wondering if they should have started earlier.
The truth?
This was never a column about an eight-year-old.
It’s about you.
The one reading this on your phone, or in the paper, or while you’re meant to be doing something else. You’ve got the chart. You’ve got the proof. You’ve got an eight-year-old who’s already braver than most adults.
So what the hell are you waiting for?
Tread Your Own Path!