Fatherly advice makes sense

DOING an “interview” with your father makes it a lot easier to talk to your own children about meaningful things that usually get swept under the carpet, writes SCOTT PAPE.

Generic photo of an Australian family at home

I JUST wanted to thank you for last week’s Father’s Day column. Specifically, your heartfelt suggestion on giving the “ultimate Father’s Day present” by interviewing your dad about his life and recording on a mobile. It brought a tear to my eye.

Last year I buried my father, and I’d give anything to have a video of my father talking about his life, saying what he was proud of, and passing on his wisdom to me and my sons.

So last Sunday I gave my sons the ultimate Father’s Day present. I said things to them that I’d let build up in me for decades. It was a very powerful, very emotional experience.

Chris

BAREFOOT SAYS: Thank you for your kind words. I’ve had an enormous number of dads write to me this week saying similar things — that doing an “interview” made it a lot easier to talk to their kids about meaningful things that usually get swept under the carpet … when you’re too busy scolding them to get their dirty boots off the carpet. If anyone reading this missed last week’s column, they probably have no idea what we’re talking about. Here’s the guts of it: if you’re lucky enough to have your father still with you, here’s how you can give him the ultimate Father’s Day present. Today, whip out your phone, hit “record”, and ask your dad these questions:

1. How did you meet Mum?

2. What advice can you share with me about money, life and happiness?

3. What does being a dad mean to you?

4. What are you most proud of?

5. How would you like to be remembered?

This is not for Facebook or Snapchat. It’s for you and your family’s legacy. One day, it’s all you’ll have left of him. And you’ll treasure it.

 

RATING EARNING PERFORMANCE

Have you ever done a comparison between, say, 10 specific properties in any Australian major capital city and 10 specific shares (not just the All Ords index, which continually drops non-performing shares) over an extended period of time (at least 20 years)? I would be interested in the result.

Gary

 

BAREFOOT SAYS: Maths teachers reading this are having a statistical sneezing fit at your suggestion: the comparison you have suggested is far too subjective. A better measure is the ASX’s Long-term Investing Report, which tracks the 20-year returns of different assets up to the end of 2014. It reveals that over the past 20 years Australian shares have returned 9.5 per cent, and residential property has returned 9.8 per cent. So, if you had invested $100,000 two decades ago, it would have grown to be worth $615,000 in shares and about $650,000 in property. However, when you factor in after-tax returns, which is the true return investors get, shares come out ahead because of the benefits of franking credits on dividends.) Finally, your question hits on a very important point: the key benefit of an ultra-low-cost index fund is that (in your words) “it continually drops non-performing shares” each quarter. That explains one of the reasons why business magnate Warren Buffett announced in his will that, on his death, 90 per cent of his wealth is to be invested in an index fund for his wife.

 

CASH AND GOOD CITIZENS

We have opened Dollarmites accounts for our five great-grandchildren. With the spray you have given them over the past couple of weeks, where can we do better? To each account we pay $50 at birth, $50 each birthday and Christmas, and $5 each month. What are the alternatives and how difficult is this to change?

Phyllis and Reg

 

BAREFOOT SAYS: It’s a lovely, wonderful gesture. Yet the truth is that the money isn’t going to grow into anything life-changing over 20 years. By my calculations, it’ll be lucky to be worth around $2000 in today’s dollars. Big deal! That’ll buy them five nights in Seminyak and all the Bintang they can keep down. So, you need to ask yourself some questions. What’s the purpose of giving them money? Is it for them to have warm fuzzy feelings about you? Or is it to teach them the value of a buck? I’m hoping it’s the latter. If so, here are three ideas:

First, you could encourage them to save their pocket money, then match them dollar for dollar on whatever they save. Make sure you do it with glass jam jars so they can see the money going in — remember, kids are visual learners. (That’s another reason why the Dollarmite banking program fails.)

Second, you could buy them some shares in a company like Woolworths, and as they get older you could use it as a lesson. Go to the supermarket with them, look at the money going into the tills, and explain that they’re a part-owner of the business. Teach them the life-changing power of compound interest, first hand.

Third, as a family you could support a social enterprise in a developing country. Don’t just sponsor a kid — help build a village. Then, when your great-grandkids are older, you could use some of your savings to send them to volunteer in the community they’ve had a relationship with in their childhood.

As I’ve said, signing kids up to Commbank’s Dollarmite database will result in them being groomed for a credit card when they’re 18. You have the power to use your money to build empathy, thrift and hard work into the character of your great-grandkids — and that’s going to transform your family tree.

 

barefootinvestor.com

Originally published as Fatherly advice makes sense