My daughters will be heading out into the cold, cruel world over the next few years, and that got me thinking about what I would have liked to know when I was their age. I came up with a number of things, but would I have listened to my father if he passed on his knowledge? Maybe. I would have had to keep it around because it wouldn't soak in the first time around. Besides, it wasn't until I was nearing graduation from college that I was really living on my own and realized there was no reason for my parents to be supporting me. By then it was just tuition for my last required course, but it was time to be on my own.

There were a number of things I didn't really need to know. Buying my first car - it was a gift when the rest of my family moved to Germany. IRAs? Didn't exist. Saving money? I had a savings account since grade school. Being good at math, I had a decent understanding of compound interest, incomplete it turned out, but the basics are simple. Checking account? My parents helped set that up when they brought to CMU for my freshman year.

Looking back, there are things I would have done differently, but all in all I did pretty well. My intent here is to pass on some of what I learned over the years. Most of it is stuff up to my mid-20s, but there have also been major changes in the investment world that make longterm investing a lot simpler than it used to be.

Each page below covers one topic. Call it a lesson, call it a lecture from Dad. Skip the stuff that doesn't apply today, but come back when it does. If it's useful, let me know. If using it helps you, let me know. If you have better ideas, let me know.

• The Magic of Compound Interest
  Spreadsheets are pretty nifty applications. With just a little multiplication and addition you can see the amazing things that happens to $1,000 given enough time and interest.

• Your First Paycheck's Dollars are the Most Valuable
  You really won't appreciate this for decades, I just want to plant a seed that will bloom sooner or later. Until then I'll be happy if this nags at you while you buy that new gizmo or latest fashion with your hard won earnings.

• What that Latte Really Costs You
  This is an updated version of an old chestnut. Financial advisors used to show people how much their pack-a-day cigarette habit cost, but lattes seem to be just as addictive. While they won't kill you, they can do a "number" on your future net worth.

• Saving Money
  Back in my day checking accounts didn't pay interest and passbook savings accounts paid 3%. Today, neither pay much of anything, but there's a nifty investment that pays well and comes with duck checks. (It looks like a check, it's used like a check, it works like a check, so it must be a check.)

• TBD Buying a Car
  If you really need a car, you need to buy a car. However, cars are really expensive, especially if you want more than you need.

• TBD Saving for Retirement
  Umm, remember those precious first dollars? Ideally, you'd save them for retirement. Reality, of course, has different ideas, but saving for retirement when you can is important. Yes, it will be decades before you believe that, but keep the faith!

• Buying a House
  "Land just isn't being made any more" (not quite true), "Real estate always goes up" (Hah!), "Why pay rent when you can own?" (Getting warmer.)

• Home Mortgages
  I have strong feelings about these. Yes, they're a nice tax deduction, but there's only one case where paying interest is sensible. BTW, mortgage is Latin for "deathgrip."

• TBD Mortgage Math
  This is most interesting to scientists, engineers, and people who know how to use multiplication and addition on spreadsheets.

• TBD Making Babies
  Cars are expensive. Children are really, really expensive. I can build a strong case for borrowing your friends' kids. However, we do seem to be genetically predisposed to passing on our genes to a new generation. Rule of thumb - don't make babies until you can afford them.

Contact Ric Werme or return to his home page.

Last updated 2007 August 3.