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261: Teaching Your Kids about Money

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Catch the full episode: https://www.wealthformula.com/podcast/261-teaching-your-kids-about-money/

Buck: Welcome back to the show everyone. Today my guest on Wealth Formula Podcast a little different he is an 18-year-old kid. He’s an investor, an entrepreneur and he’s the author of teen investing which is available on Amazon his name is Jack Rosenthal. Jack also started the Young Investors Club LLC which is at younginvestorsclub.org which he’s grown from zero members to over 90 members today and has a hundred and twenty thousand dollars of assets under management. Jack welcome to Wealth Formula Podcast.

Jack: Thanks so much for having me on, really appreciate it.

Buck: So Jack, tell us a little bit about how you became an entrepreneur and investor.

Jack: Yeah totally. So where to begin. So I think the best place to start would be with the young investors club I started that when I was 14 my freshman year of high school and yeah like you mentioned I started with just one member me and I grew that club to eventually becoming the largest teen investing club in the country that I’m aware of. We started with the club that year with zero members just me grew to 20 members that year with over 20 000 in assets in the club and then we kept growing year after year finally junior year I think we’re up to about 40 000 in assets and close to 40 members. I was like you know what I have something pretty cool here but I want to take this thing to be the largest so I grew it that year we like tripled in size that year and by the end of that year we had close to 100 members and over 120 000 in assets in the club, I’m making us the largest that I’m aware of teen investing club in the country.

Buck: Yeah. What got you interested in this? I mean what you know you’re 14 years old when I was 14 I was really just interested in you know sports and things like that.

Jack: What, sports and girls right? So, first of all, I was interested in the same two things. I was also interested in investing and I always had a passion for it outside of school just every single kid I think has their kind of their hobby their sport their passion but there’s some kids really like playing chess other kids just want to play basketball you just see them out there on the hoop all day long and all they want to do is just shoot basketballs my passion my sport’s always been entrepreneurship and investing. So when I was 14 Buck it started way before that I had my own investment portfolio, I’ve been investing in the stock market for a while and basically what I was doing is I was looking for a way that I can invest alongside other teams we could all invest together at a pool of money make investment decisions together collectively and hopefully grow the the pot together so that’s really what initially gave me the drive to start the club and then in order how I started the club it’s like believe me it’s no easy task to get 20 kids to sign up and for them all to put in a thousand dollars much more than people there’s only so many kids that are interested in investing not to mention kids that actually have money to invest so the way that we did that is we partnered with a much larger organization it took me six months of convincing this much larger group which was actually a parent network which I knew obviously had a lot of teenagers in it because through the parents and after six months of going through hurdles and decision makers we finally got approved to be basically on their platform and they sent out an email blast promoting the club to their members and that’s how we grew to 20 members the first year and then the final year this junior year when I really expanded the club we expanded outside of New York so we said okay we’re gonna do this for basically all up and down the east coast and that’s really how we do the club tremendously.

Buck: You know you talk a little bit about your background not only the investing part but as an entrepreneur tell us a little bit about some of the things that you’ve done as an entrepreneur.

Jack: Yeah so in addition to investing obviously where do you get the money to invest in the first place well you gotta create it through in my case for entrepreneurship so let’s see I started my first business when I was six years old selling paper airplanes over the internet coolpaperplanes.com which has had over 50 000 visitors since I think that’s because we’ve got a great domain name back then when I was six when they were much more new started that business we sold 70 airplanes made one dollar each on each airplane at 70 bucks but when I was six I was like whoa got more money so I was six and then I started a vending machine business when I was I want to say 11 or 12 or something and I ran that for three years that was a great business. Every weekend I would make 50 bucks collecting candy in that machine and snacks and taking out the money and so I made 50 bucks every weekend for three years running that business. I also did online lending thing through something called Prosper the way that that worked is my dad lent me one thousand dollars at a one percent interest rate which was the same rate the bank was paying him so it’s no different giving me the money versus giving to the bank. Basically I went on this website called Prosper where I could make peer-to-peer loans and re-lend it out to other people in small increments so I relent at like a seven or eight percent interest rate borrowed at one percent kept the spread and then we did the same thing with five thousand dollars and then I have like 370 a year coming in so those were some smaller kind of entrepreneurship things I did when I was younger and then when I got older obviously got a little bit smarter and started to make some more money a little bigger businesses I started like an ebay business which did really well started an etsy business where I think I made like a few thousand dollars in just one month alone selling products on etsy a whole bunch of different online e-commerce consulting businesses that I’ve run throughout the years.

Buck: Are your parents entrepreneurial?

Jack: Yeah so my dad is an entrepreneur, he’s a finance guy. He started an investment company and you know it’s funny we were talking about a different podcast but he really had a great strategy in terms of teaching me how banking worked at such a young age I basically became like a bank when I was 10 years old when I was doing the Prosper thing lending borrowing the money from depositors my dad in this case and then relending it to others keeping that spread I was basically becoming my own little mini bank and he was teaching me how the financial system worked through actually doing it.

Buck: Yeah that’s great I was just thinking that myself that’s a great way to teach that so my audience you know we get a lot of investors or they’re not kids typically although there might be some children of listeners and I know they’re thinking to themselves when they listen to you, you know I would love to get my kids somehow interested in financial education at all right so obviously you’re in the business of doing that I mean that your latest business is you know basically you know this investor club. So any thoughts for parents on how to get their kids interested in financial education in general?

Jack: Yeah I mean the biggest thing you say is like online resources education and one of the biggest ones I’d say is honestly my book Teen Investing. I mean it’s written by a teenager for teenagers. There’s some other team investing books out there but as far as I’m aware of it’s one of the few ones that’s actually written by a teenager and not to mention a teenager with as much investing experience as me.

Buck: What kinds of online education outside of your youtube channel do you use for educating yourself?

Jack: Yeah totally so I mean I like Graham Stefan and I think he’s a cool dude do you ever hear Graham Stefan he’s got like three million subscribers on youtube super nice I think you could tell he’s like a genuine person he doesn’t just constantly want to push like his course or something like that he actually wants to provide value. He has a course too but he doesn’t like it’s not the whole goal of this channel is not to try and push its course it’s to educate others and then as of course on the side so I like what he’s doing there. Let’s see I love Charlie Munger. What’s really cool is through the internet you can basically learn from these people without even as you said he’s your neighbor but I live all the way here in New York and I’m still able to learn from him just as much as you can.

Buck: Yeah well that’s great. You know right now obviously you know you have your own influences from your father and his financial firm when you think of investing. What does that mean to you? Does that mean stocks does that mean equities then? Is that pretty much what you’re focused on?

Jack: That’s what’s meant to me so far and that’s because it’s the easiest for a teenager to get involved into

Buck: Sure real estate or a different asset class. Try doing a real estate transaction when you’re 16. You’ll find there’s so many different problems with that although you did use Prosper which is I would consider you know an alternative

Jack: Definitely and what’s so cool is yeah it’s so simple even when 10 year olds can do it but nevertheless that was like online you know online making loans online doing the stock market just through an online trading account you know when you start going outside of that where it’s like offline then it gets a lot more complicated to do as a younger person. So yeah the main reason why I’ve been so involved in that is just because it’s the only thing that I could do up until I was 18 years old I just recently turned 18 like six months ago.

Buck: Congratulations on that. So tell us what’s your personal investing philosophy. What do you interest in one and why?

Jack: So I invest primarily in the stock market. Most of my money is in the stock market. A lot is in the S&P500 great asset to invest in especially I used to do like kind of more month-to-month stock trading like lately I haven’t had a lot of time with that I’ve been kind of busy with other projects so I just leave the S&P which has produced a return of eight to ten percent every year for the last 50 years and probably will for the next 50 years and I got a long time horizon on me so I can afford to wait yeah I got a lot of money in sp 500 I also invested in Blackstone, Amazon Berkshire Hathaway a ton of other great companies that I really like.

Buck: Got it and how do you decide on well obviously you know if you’re doing the S&P you’re buying the market how do you decide on the individual companies what are you doing there are you looking at what are you looking at their you know PE ratios and those types of things are you kind of just going in reputation or how are you doing it?

Jack: Yeah so the biggest thing that I’m looking for is companies that I think are going to be around for the next 30 years. I really care about just what’s the long-term value of this company. Amazon’s a great example yeah I know it’s like the blue-chip stock and everyone’s like oh Amazon’s so simple but if I really had to say companies that I think are going to be here for the next 30 years Amazon dominates e-commerce I think over 50 cents of every dollar spent on e-commerce in the United States goes to Amazon that’s a powerful number and that e-commerce retail market is only getting bigger and bigger. I think it only represents like one or two percent of the total retail market right now I think there’s a future where it could represent 50 percent of the u.s retail market e-commerce and if Amazon’s in a position where they’re controlling half of that. That’s a 10 trillion dollar company, not just a two trillion dollar company so I think that Amazon and companies like that that are really going to be around for the next 20 30 50 years those are the kind of stocks I like to buy. And then, of course, the second thing is trying to get them a good price you know trying to find some kind of news event that’s happening recently which has caused the stock price to get them down a little bit that way you can it kind of limits your risk to the better price you’re getting in on the stock and it also gives you more upside got it.

Buck: So what’s next for you? Are you a senior now?

Jack: So no I’m a freshman in college. And let’s see well I mean the biggest thing is I just wrote this book Teen Entrepreneurship. I wrote that a month ago while I was in college. I wrote that book it took me a month and a half to write the book start to finish which you’ll find for a lot of other authors they spend years writing their book they spend 10 I think 10 000 minimum for publishers and everything like that and basically it’s like the whole thing with over production and they spent way too long on writing these books I’ve seen it happen so many times with the authors and they very rarely ever break a profit because they get sold the stream by publishers. I managed to write that book this book that I actually have right here you can kind of see it with zoom and I managed to write in a month and a half did not cost me ten thousand dollars plus or anywhere near that to write the book and yeah we’ll likely recoup a lot. Basically, all the money I spent writing the book within like the next month or so. And then the first book Teen Investing that’s I mean what’s funny is these books kind of become like a business I mean the Teen Investing book that’s done so well in the teen investing category every month now I get passive income coming in from that book and that book itself has become a really nice strong business. So these two books are some of my latest passion projects and some of my latest projects and now I’m looking to just continue to grow the sales of this book Teen Entrepreneurship and yeah hopefully we can sell a lot of copies by being on your podcast today. Let’s see and and in terms of you know, I want to be an economics major and finance major.

Buck: Sounds good. Have you read Rich Dad Poor Dad?

Jack: You know it’s interesting I’ve read like the synopsis, I’m very well aware of the whole idea of like okay yeah I’ve got the rich dad who’s the real estate ambassador doesn’t have a nine to five job I was real dad and I got the whole idea so I haven’t read the book but I’m very well aware of the story. So no I haven’t read the book but I know what the book is about.

Buck: Well I will recommend it to you. I know there is this there is a little bit of a schism between the traditional financial people and people who are you know sort of followers of Robert Kiyosaki like I was but certainly, I have met more self-made multi-millionaires who were followers of Robert Kiyosaki than probably anybody else on earth including myself so I would recommend that to I pretty much recommend that to anybody who’s just getting started. How do we find the youtube channel?

Jack: So okay you can find my youtube channel by going under my name my alias on youtube. I started the channel when I was 17 years old so I did it under a different name that’s hence the confusion. So I ran that channel in her name called Jimmy Duke j-i-m-m-y space Duke that’s my alias, that’s my second name when I was 17 I just didn’t want to create, I don’t know I didn’t want to put my own money here and yeah I think it’s actually common a lot of parents don’t really want their name on the internet. So I started that channel at 17. So anyway the channel is Jimmy Duke. 

Buck: And then the book is called Teen Investing available on Amazon. Did you have one on entrepreneurship too?

Jack: Yeah so Teen Investing on Amazon and Teen Entrepreneurship on Amazon and you could sort of find both those by just searching my name Jack Rosenthal.

Buck: Great, Jack, well nice to have you on Wealth Formula Podcast. Good luck to you.

Jack: Thank you, thank you, really appreciate being here and talking to your audience hopefully they got to know a little bit more about me and hear a teenage perspective on investing and entrepreneurship and I’m sure many of them are parents so hopefully some of the things that I’ve done they can kind of pass on to their own teenagers and yeah.

Buck: Absolutely. Good for you. We’ll be right back.