Where does the time go?

You didn’t believe her, but your mom was right: They grow up fast.

One second, you’re the center of their universe, cutting grapes in half, wiping runny noses, snapping on booties and buckling the car seat for a trip to music or tumbles class. The next, they have the car, and you’re alone in the kitchen, taking your grapes from a box of cheap wine and wondering where it all went.

Aside from a loving home and setting your best example, there are few things you can do today more important than opening a brokerage account for your kids. Think not?

Argue with this logic-

Reason #1: Compounding

Investment returns compound; everyone knows that. It doesn’t seem all that special because in the beginning, it isn’t. But with the time horizons your kids have, it’s rocket fuel.

Most don’t start early enough to see the magic. Do this now, or your kids will end up putting it off too long, like you did. You may be broke, but it doesn’t take much, even a few bucks per week will do.

Maybe as you read, the light is going on. You call the grandparents and pitch them for $100 each to “invest in Johnny’s future”. You commit to adding $15 per week, and increase that 15% each year, holding Johnny accountable with age-appropriate chores for a four-year-old, like putting his toys away.

This simple act of foresight, and Johnny is a millionaire by 36.

By age 50, he’s worth over $5 million, and by 60, $15 million, 88% of which are capital gains (i.e. free money), with over $1M in annual growth, every year, for doing nothing-




Einstein called compound interest “the most powerful force in the universe, and the greatest mathematical discovery of all time”.

This is the guy who discovered the theory of relativity, the relationship between energy and mass in the universe (e = mc-squared). Most people call that the greatest mathematical discovery.

Unlike the genius Albert Einstein, most of us are too simple-minded to grasp the concept of “exponential growth”. We think linearly (as we scroll through Facebook, drooling into a bag of Cheetos).

Here’s the thing-

All exponential functions – including compound interest – eventually turn up like hockey sticks. Your kids still have the time to capitalize. Wait 20 years, and they will miss the big launch point. Poof, all gone.

(And “all done”, wrists twisting, as I sign it for your toddler).

To catch the rocket ride, you have to start early. If you do this now, your kids will be in their prime when their brokerage accounts turn up like hockey sticks.  

You really don’t need any more reasons, but here they are anyway.

Reason #2: Education

It’s no one else’s job to teach your kids about money or investing. If they fall flat on their face financially, it will be your fault, so you better have a plan.

By education, we most definitely don’t mean “school”. School is where a child’s natural curiosity and passion for learning go to die.

Kids learn best by doing, and it’s better to get their mistakes out of the way early, with small amounts. That will earn them fortunes in the future.

If you put your head in the sand (because you don’t know how, or don’t have time), your kids will get eaten alive like the Millennials.

Reason #3: Saving

Deferred gratification – producing more than you consume, and saving the difference – is the key to a life of abundance. Simon Black calls it “the universal law of prosperity”.

As the sky is blue, this will be true for your kids. Starting a saving and investing plan now instills inside of them a lifelong propensity to save. As humans, it is our habits that shape our destiny.

Build good habits now.

Reason #4: Debt

As water is wet, consuming more than you produce and borrowing the difference is the universal law of poverty, hardship, destitution, and failure (pick your antonym).

Until they are sophisticated enough to use debt to their advantage, your kids must avoid it like the plague. A brokerage account can teach them the difference between saving, investing, and borrowing, plus ensure they are positioned to evaluate and manage expenses and financing in the future.

Reason #5: The Great Crash of 2020

Here’s an ugly stock tip: The current boom will end in colossal bust.

The Federal Reserve engineered massive asset inflation with 0% interest rates to repair the big banks and grow the economy after the 2008 crisis.

Low interest rates cause misallocation of capital (“malinvestment”), and now, after 10 years of it, the Fed is trapped and can’t get out.

They either forgot how capitalism works, or don’t care (hint: it’s the latter).

We need bankruptcies to clear out the malinvestment. It’s called creative destruction. Small fires are needed to burn out the dead wood. If you prevent them, dead wood piles up, and the whole system burns.

Like a toddler with a carving knife, the Fed is wondering around blindly and could slash up the family dog or fall forward and impale themselves at any moment (i.e. crash the market, or destroy the currency).

When this cycle turns, the bust will be horrific. So why open a brokerage account?

Your family will be investing alongside titans like Warren Buffet and Ray Dalio, building muscle memory to “buy when there is blood in the streets” and “be greedy when others are fearful”.

With their time horizon, your kids will start small, and accumulate shares by feasting on the bargains of a lifetime as prices overshoot intrinsic value to the downside.

Imagine the adults they will become with this experience under their belts.

Reason #6: Freedom

The recklessness of central banks and governments is completely unbridled, both in financial policies and their affinity to start wars. Your kids should have a Plan B, in case “the whole shithouse goes up in flames”, as the late poet-prophet and Doors front-man Jim Morrison used to say.

Defending our soil is one thing, but fighting and dying in unjust wars of conquest is another. There was nothing unpatriotic about the Jews who left Germany in the 1930s.

America – the idea, which is about liberty – is beautiful, alive and well in the minds of many. They can take it with them. If the Orwellian nightmare is realized, it will not be America they leave behind.

To paraphrase Doug Casey, today you and your children are milk cows. It will be nice to have some funds tucked away for the day the government decides it’s hungry for a hamburger.

Reason #7: It’s totally free

Traditionally, all brokers charged fees, $10 per trade or more. This made it impossible to invest small amounts without killing returns with those fees. Today, there are companies that do it for free.

We use M1 Finance (www.M1Finance.com). There are no fees whatsoever.

We do not receive kickbacks or affiliate fees from M1. We use it and like it, but there are other options. Also, M1 will not offer custodial accounts until later this year; download our Ultimate Guide for a workaround. 

You can automate regular deposits from your bank account, buying fractional shares in a “pie” of stocks you designate on a schedule that fits your budget. It’s like creating your own mutual fund.

It’s this innovation — automated deposits and zero fees — that will enable your children to become multi-millionaires through investing.

Reason #8: Clean House, Clean Mind

In exchange for the allowance, Johnny will keep his toys organized. This is worth a few bucks per week all on its own. It also helps not to be reminded how totally f—ed the global economy is.

Think about it… Worthless plastic trinkets, dutifully assembled in coal-fired factories on the other side of the Earth, are floated 16,000 miles on container ships and exchanged for digital representations of green paper currency units created from nothing by a politburo of stuffed shirts in New York and DC.

The 1s and 0s are sent to Asia as the trinkets are trucked around this continent to giant retailers where they wait patiently on shelves for us to plop our kids in their filthy, sticky car seats that expire in two years because the manufacturers own Congress, and graze the aisles like once-wild-but-now-neutered baboons, pacified by a steady stream of processed foods, pharmaceuticals, pseudo-news, and blue light.

Meanwhile, the stuffed shirts in Asia keep moving coal into the plants and turning out more junk for their fat friends in the USA, lending us back the currency units by buying Treasury bonds and asset-backed securities, only to be paid back later by still more currency of lesser value in the future.

That is, they do this, until they don’t. Then come the real fireworks.

Ah, family life in a global paper money system.

But at least you’re thinking again. It feels good to be alive, awakened from your slumber by the weight of responsibility, a head-of-household with loved ones to tend to.

Welcome to BadDaddy Publishing, friend.

Now get your ass in gear, and build some real security. Need help getting started – the how, what and when, with a simple, ten-step plan?

Download our Ultimate Parent’s Money Guide and Action Plan below. Rest assured, we take the advisory role — and the trust we aim to build with you — very seriously.

Then step outside, shotgun a beer, and smash something over your knee. And if those lazy kids of yours haven’t done it yet, go buy yourself a Best Dad (or Mom) Ever T-shirt. You deserve it.

Download your copy of the Ultimate Parent's Money, Saving & Investing Guide

Ten Simple (and free) Steps to Automate an Investment Plan Today.


Want more like this? Try We’re Headed Back to a Gold Standard (and what to do first). As always, question authority, friends.

  • By admin
  • Jun 2019 at 12:05 pm
  • 20

20 Replies to “Eight Essential Reasons to Open a Brokerage Account for your Kids (and how to automate it for free)”

  1. What a breathtakingly clueless pitch this is. The doped market is in extremis and those already in are going to lose the farm. But that disaster will be insignificant, compared with the impact of catastrophic climate change. And these jokers are shilling for the stock market.
    Jump in – the water’s fine!

    1. Thanks for reading, Howard. You’ll note we don’t disagree that the market is headed for a crash. Reason #5 in the article spells out why it’s still a good idea to open a brokerage account for your kids, and start automating regular, small deposits. On their timeline, the crash is a good thing. They will feast on desperate sellers at fire-sale prices. If parents of little ones don’t set these accounts up now, they aren’t going to do it then. For folks who download the Guide, we go into more detail (it’s about 50 pages), and have a contract they can sign with their kids that explains how it will unfold (when rates go up, or some other catalyst pops the bubble), and how they should view it (so they can be reminded that this was expected, and is really an opportunity). As for climate change, that’s a whole different animal, and not our area of expertise. We’ll be watching it closely, enjoying the moment (because they are few, and precious), while we also plan for the likely possibility that our kids will still have living expenses, and will be better use to the world if they have capital, are self-reliant, and not financially illiterate. Thanks again!

    1. Hi Lori! Thanks for reading. Our detailed thoughts on the 529 can be found here (https://thebaddaddy.com/the-college-debt-bubble-and-six-rules-for-529-plans/). In summary, we think that college tuitions are in a bubble, and will come down over the next 10 years. Because of this, avoid the prepaid tuition plans (use only a 529 savings plan). Since the investments inside will grow tax-free, they will have advantages over an individual or custodial brokerage account, but you are limited on what you can spend it on without penalty (i.e. qualified education expenses). A 529 savings plan is prudent if you feel strongly about sending your children to college, but don’t go overboard and project today’s tuition increases into the future. Prices will come down, and there are many better alternatives to traditional college expenses until they do, like entering the workforce as an employee for a scalable small business and just being a super star, helping that business grow. I wouldn’t consider the 529 a substitute for the individual/custodial account, but that doesn’t mean you need to find new funds. You could split your current contributions between the two. The recommendation in this article is expanded upon in the Ultimate Parent’s Guide, where we discuss engaging your kids in the whole process. Thanks again for reading/writing!

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