8 years old crafted simple and winning portfolio

Kids moneyFor those who have read Robert Kiyosaki’s “Rich Dad, Poor Dad” and his other works, you would by now know that to be able to achieve your financial success, you need to have money work for you by investing them.  You need to be an investor.

For some, the words investing and investment give them the impression that you need to have a great sum of money to start with.  Something which they think that only the rich can afford to do, to invest in.

However, Yahoo Finance on 19 Feb debunk this false impression.  Yahoo Finance wrote of how a 8 years old crafted a simple and winning portfolio with just a few thousands dollars.

Here’s how Kevin Roth, an 8-year-old second-grader got started. He got a gift from grandma and a few hints from his father, Allan, a no-nonsense financial planner in Colorado Springs. It’s a simple portfolio of three no-load, low-cost index funds.

Yes, it does cost a minimum investment of $3,000 in each of the funds, for a total of $9,000. But my advice to David is: You have to start somewhere, so shoot for this one.

Click here to see the portfolio.

Please note that this second grader’s portfolio not only beat the S&P 500 by two percentage points last year according to Morningstar’s data, it actually beat all five of our lazy portfolios in 2006, so we may add it to our list!

Here’s how Allan describes the advantages his son has over most adults:

  • The calculations suggest Kevin’s portfolio beats 95% of professional portfolios (the worst performing of the three funds beat 65% of its peers) in 2006. 
  • By owning the entire market, Kevin will beat the average dollar invested because his costs are so low. 
  • Don’t confuse owning lots of funds with being diversified; three’s enough. 
  • Kevin has other advantages over adults: He doesn’t go to cocktail parties where people brag about their investments. 
  • No financial planners (a.k.a. salespeople) call on him to exploit emotions. 
  • He doesn’t watch the financial shows on TV — doesn’t even know who Jim Cramer is.

The point is: Bite the bullet. It’s time for some discipline, so forget about a new plasma TV and focus on a starter portfolio. There are a million ways to procrastinate … but I promise you, once you start, it gets progressively easier (set up automatic deductions from payroll and get used to living on less). Just start! Do something! Action! Put a hundred bucks in the cookie jar. Buy one fund. Take responsibility.


Moral of the story?  If a 8 years old can invest, so can you!  Age is not barrier to investment and so is the amount of money you have.  If you have little, invest with what you have.  Start somewhere and get going.  No one except you are responsible for your own personal financial success.