How a 15-year old learned to retire.

I’m a huge proponent on financial literacy because I see how the world of money works. The system is rigged in favor for those that understand, and enslave those that don’t. I like to share information about money and investing so my circle of friends and family have the opportunity to thrive. Nobody teaches us about money throughout adolescence or grade school. And the only thing Monopoly taught us is that the bank never runs out of money (true in real life too). I was incredibly fortunate that my dad learned financial literacy, and passed the knowledge down to me and my brother at a young age. This got me thinking. What was the catalyst for my dad to learn about investing for the future?

I posed this question to my dad in 2021. At the time, he was 64 and I was 35. He opened up about our family history and I learned how we went from no money to financial independence in just three generations. Here is that story:

My grandfather, Mervin, was a smooth-talking salesman all his life; because he had to be. His father died when he was 14 years old and he took it upon himself to provide for his mother and siblings. Noted good guy. Merv, as his friends called him, hustled for his income, but was too scared of investing in the stock market because he didn’t want to gamble with his hard-earned cash. Merv saved his way through life and worked well into his 70’s. That’s nearly 60 years of earning an income. Aside from a modest house, not a penny was ever invested. He died at 90 years old with only a few crumbs leftover.

Let’s rewind the clock a few decades to the early 90’s when my dad was 35-years-old. My parents had just moved to the U.S. from Canada for my dad’s job where they built a house in a newly developing neighborhood. They planned to live there for many years to come. One day, a door-to-door salesman promoting his finance company knocked on our front door. The owner and financial advisor spoke with my dad for a while and provided a compelling argument for making an investment plan to put money away for retirement. The conversation at our front door that afternoon was the beginning of a fruitful relationship that still remains intact today.

My dad’s nest egg will outlast him no matter how long he lives. This is a significant improvement from my grandfather’s position at the end of his working years. My grandfather was incredibly tight with money and often worried about outliving his nest egg. Imagine working your entire life and still having to worry about money? That always stuck with me as a kid because I didn’t like seeing my grandfather stressed like that. He was the sweetest, kindest man with a heart of gold. He deserved to live free, but never had the knowledge to get rid of the shackles. He was also bursting at the seams with pride and would never take a handout from his son. My dad didn’t like seeing his father worry about money either, but his greatest impact would be to make sure future generations don’t make the same mistake.

Let’s go back a couple decades to 2001. I was 15-years-old. My first taste of employment was at AMC Movie Theater making $5.15/hour and I remember coming home with my first paycheck feeling less than happy. I assumed if I worked for $5.15 an hour, I would receive all $5.15 for each hour of labor. I was very bummed to find out about tax withholdings. How could someone else take my money that I worked for? I went straight to my dad for an explanation on this thievery.

He explained how taxes paid for services in our community which forced me to begrudgingly accepted the fact that government will always take a piece of the pie. “Two things in life are certain, death and taxes.” — Ben Franklin

Now for the real important question. Dad, “Can you cash this check for me?” I don’t know why or how, but this question and subsequent conversation with my dad stuck with me forever. He agreed to cash the check on one condition. I must put $20 of every paycheck to the side and invest it. WHAT?! The government just took a bunch of my money and now the old man has sticky fingers too? But dad, “I need a stereo system and black lights for my car!!” He held firm, and then deployed a psychological maneuver that I don’t think he is even aware he did.

My expectation was him stealing $20 from me every time I needed to cash a paycheck. The reality, which he showed me in an example below, was much different. He literally showed me how to make money for free. Now we’re talking! I was disgruntled about the government taking my money from the very first paycheck, so I’d do anything to stack the deck in my favor. My expectations of rags, but reality of riches was such a mind bender in my teenage years that it burned a habit into my brain that has never gone away. Here is the example my dad showed me that day:

He started with the Rule of 72.

Which states, if you divide 72 by the percentage (%) return you hope to receive, the resulting answer is how many years it will take for your original investment to double. If you hope to earn 8% annual returns on an investment of $100… 72 divided by 8 equals 9 years. After ~9 years, your $100 is now $200. After 18 years, that original $100 is worth $400. If the average person works for 50 years, that original $100 gets the chance to double over FIVE times. That $100 from 50 years ago is worth $3,200 at retirement. Aside from being patient, you did nothing and that money grew all by itself.

My dad threw a bunch of examples and numbers at me that day, but knowing my money will double every 7–10 years is what really stuck. He wrote down a quick example like the one above for how my $20 would compound over time. He also explained how the effect would multiply if I continued to add to invest regularly. We played around with different amounts over different time periods and the dollar amount showing at my retirement age was always unbelievably large. Always millions.

Eventually, I stopped going to my dad to cash my checks and opened a bank account of my own. I deposited my paychecks into the checking account, and always moved $20 into my savings account. Every time the savings account reached a couple hundred dollars, I pulled it out and gave it to my dad to put into my investment account. My dad gave me the equation, all I had to do was plug the numbers. I’ve added to that same investment account religiously for over 20 years. It has played out beautifully since that first movie theatre paycheck of $172.

Now, at 35, I have financial peace of mind that my grandfather was never able to achieve. I don’t need to worry about retirement years because the momentum of my early discipline will carry me and my family well beyond the years I’m capable of working. My grandfather was a career driven man that worked hard all his life. He, like most people, had no idea the system was rigged against hard workers trying to save their money.

The problem is, you cannot save your way to wealth. You must invest your way to wealth. The growth effect of time and compounding interest is the only way to exit the quicksand pit of inflation and currency devaluation. I am forever grateful to have learned these money principles from my dad. I will pass this knowledge along to as many people that are willing to listen, including one final and important part of this story.

When I met the woman I eventually married, she already had a son. He was introduced into my life when he was 10 years old. Guess who started investing at 10 years old?! Mow a lawn for $10, $2 goes towards investing. You get the point.

I’m living proof that financial literacy works. In a world designed for instant gratification, try, just try, to have a little delayed gratification. Your future self will love you forever.