Father Sez

From and to parents - parental advice to our children on personal financial management and life.
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There are a silver lining to this financial mess going on around us….for me anyway

Monday November 10th, 2008 by fathersez

Amongst the mantras of successful stock market investing is to buy when there is blood in the streets or when everyone else is fearful.  

I have gone through a number of such periods in Malaysian stock market history. The famous October 1987 crash, the 1993 steep drop, the 1998 Asian Crisis, the 2001 dot-com crash (which affected us too) and now what seems to the grand daddy of them all, the worldwide financial crisis. 

Though I have a finance background, I never quite learnt to take advantage of these splendid opportunities. I was more influenced by the “end of the world is nigh” theory and did nothing. Then I bought during the times when everyone was buying and as usual, in the words of my wordsmith friend, Jeya, got a royal kanda up my “you know what” when the market inevitably crashed.  

I read a nice post by Newly Corporate on 5 ways this economic downturn could help us. One of the 5 mentioned was the opportunity to learn from a full business cycle. Truly experiencing the flow and the ebb of business and learning from this. 

One of my avowed goals in imparting some personal financial management knowledge to my children is that they should start early and that careful investment in stocks, shares and unit trusts are a great way to accumulate wealth. And included in the list of lessons is the method that I used, i.e. dollar cost averaging and the recommended ways to choose good stocks and unit trusts.  

Another intended lesson is on buying during times such as now, when there is such an aversion of stocks that the good get hammered together with the bad and the ugly.  

And what better time to talk about this to my elder two girls than now? 

I clearly remember that I had no interest in saving or investing whilst I was their age. It was only after the two girls were born that I started. As we are not really a business minded family, I strongly suspect that my two girls may choose the path I followed and start on their own savings and investments only after the need becomes essential.     

I have not succeeded in getting them to regularly read pf blogs. They tell me that they have no time whilst they spend hours chatting with their friends. I have to walk carefully here and create some interest, not turn them off.  

Maybe I should form a joint account with them and work together on selecting stocks. I am not sure if the girls would like investing with imaginary money( as has been suggested), though it may work on my younger children.

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