Investment lessons a two-way street between generations
Family finances are usually a case of parents handing down knowledge to children, but older Australians can learn some investment ideas from their young adult offspring.
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Parents regularly teach their children about money and investing, but Jess Picton-Warlow has turned the tables on her dad.
After being introduced to the sharemarket by father Thomas a few years ago, Ms Picton-Warlow more recently brought new technologies such as robo advice and exchange-traded funds (ETFs) to the duo’s investment mix.
It started after the Perth-based model, 22, was visiting New York and picked up a personal finance book aimed at people in their 20s.
“I did a few online courses, found out about ETFs and index funds and got really interested,” she said.
“I introduced it to dad, told him about ETFs and then we started doing it together.”
ETFs hold all stocks in a particular stock exchange index, such as the ASX 200, through just one share, and are a favourite of billionaire investment guru Warren Buffett.
The Picton-Warlows invest in individual stocks too, and have ridden a wild rollercoaster in recent weeks with the overall market downturn during COVID-19 and in particular their Afterpay shares – which plunged from $40 to $9 in February and March but are now back above $40.
This volatility highlights a key lesson from dad.
“You have to be prepared for the risk, and understand it’s not always going to be in the green,” Ms Picton-Warlow said.
“We are definitely not selling out because it’s a long-term game.”
Business development consultant Mr Picton-Warlow, 55, previously worked in equities research and said there was “so much to learn between the generations”.
He said young adults’ current focus on the environment and their motivation to make a change would impact the future of finance and investments.
“It’s important to listen to the younger generation and rebalance accordingly,” Mr Picton-Warlow said.
Online investment service Six Park’s co-CEO, Pat Garrett, said older generations should not fear the new breed of digital investing options.
“Like watching movies at home now on Netflix, these services are simply the new way that financial services are delivered,” he said.
Mr Garrett said generations should “absolutely” share their finance stories and ideas.
“There are some important investment principles that stand the test of time,” he said.
“Do not live beyond your means, do not take on excessive debt, start your savings journey as soon as possible – the power of compounding interest over time will always be compelling, take some time to review your investment and make sure you are well diversified to match your risk profile and time horizon.
“And always try to minimise your investment costs, as fees eat into long-term returns much more than people appreciate.”
Originally published as Investment lessons a two-way street between generations