Client Question: Young Adults & Investing

June 16, 2022

Class is in session! Twice this week, I had discussions with clients about what information should be shared with their young adult/teenage children and grandchildren as it relates to finances and investing.

I always enjoy these discussions. It’s a honor to speak with young adults and add some much needed context to a topic that often times isn’t covered in traditional schooling.

If you’re a Windemere client with kids/grandkids who could benefit from such a discussion, please reach out. I’m more than happy to help! And if you’re not a client and still have a desire for such conversations, don’t worry – I have you covered. While the exact topics will vary greatly by audience, I’ve provided an overview of what I like to cover during such meetings.

1.) Start with their questions – I usually start these conversations by asking what’s on their minds. Usually they “don’t know what they don’t know” – but if they do have something on their mind, I want to know what it is to ensure we cover it

2.) Cash flow and budgeting – At any age, cash flow is king. It’s important to explain that having a solid understanding of monthly cash flow (ie: what you earn less what you spend) is imperative as it impacts so many others elements of finances such as ability to save/invest and ability to minimize unnecessary debt. A way to carefully track and monitor cash flow is budgeting, so that topic ties in nicely here as well

3.) Saving vs spending – A logical question many young adults have (even if they don’t ask it directly) is “what’s the point” of saving? Why not just spend what I have? I always find it helpful to start here since knowing the “why” helps set a foundation for lifetime savings and investing. This discussion can include simple illustrations of the needs for cash (such as an unplanned expense) or a more detailed analysis (explaining the concept of retirement and the need to save so you can pay yourself/be your own employer at that stage)

4.) Investing – Start with an explanation of compound returns, showing the power of earning money on your money. The rule of 72 makes this easy (don’t know that rule? You divide 72 by the estimated rate of return, and the result is the number of years it will take for your money to double). I then will usually give an overview of the various asset classes (cash, bonds, stocks) and common investment vehicles (mutual funds, individual securities, ETFs, etc)

5.) Account types – If conversation warrants, it can be useful to also explain the various types of accounts they will encounter (or may wish to use immediately if they have the means). For a young investor, a Roth IRA can be a great solution (provided they have earned income below thresholds), given the tax free compounding available. Others may wish to explore a brokerage account or a custodial account (if they aren’t yet of age) – or even a 401k/other employer plan if they have started working

6.) Credit score – Given how important credit scores can be later in life (when they need to access credit for home, car, etc), providing an overview of what a credit score is and what the components are can allow them to focus on building it up in a responsible manner

7.) Establish an open line of communication – I think the most value-added part of these discussions is that they open up a line of communication. There are going to be countless questions that come up over time for your child/grandchild. Once you’ve had an initial discussion, they may just be that much more comfortable to come back and ask the next one.

Here’s to helping the next generation start their financial journey!

Note: All commentary above is as of the date of this post and is for education and informational purposes only. Windermere and its principals do not intend for this to serve as investment advice and are not responsible for any actions taken based on this article. Consult your financial advisor before taking any actions as it relates to your own investment portfolio

Leave a note

Leave a Reply


Not sure what step to take next?  No problem -send us a message using this form and we'll be in touch soon to figure it out - together

Reach out

Hope to hear from or see you soon. In the meantime, travel on!


Your message has been sent. We'll be in touch shortly.

Thank you.

Follow us on Instagram