Investment is an important part of your future security. If you’re reading this, you likely already understand this. But chances are, you’ve got friends and loved ones who don’t. Most people don’t invest at all, or do so at levels that will never allow them to retire. If you know someone like this, it can be an awkward situation. You want them to be secure in the future, but we all know the experience of having a friend’s eyes glaze over when you start talking investment. It’s possible to overstep one’s bounds when attempting to get a family member hooked on investment, but there are tactful ways to make it happen. If it works, they’ll thank you one day. So make the effort; it might pay off.
- Ask Their Permission. This is a lot better than trying to “casually” mention the importance of investment around your friend, in order to passively educate them on the matter. It’s much better to lay out all your cards on the table. In a case like this, I’d say it’s OK to brag a little bit, if you’re being honest. Tell them about where you started, and where you are now. Ask them if they’re interested in learning how to do the same. Tell them, in general terms, how normal people can become excellent investors and see if they’ll invite you to help them along. Without this permission, your effort isn’t really going to pay off.
- Give Concrete Examples; Be a Good Teacher. Once permission has been attained, don’t waste your friend or relative’s time with a sloppy, time-consuming, confusing approach to their investment education. Instead, ask to meet over coffee for an hour in a few days (or whatever meeting space suggests itself). In the mean time, prepare a little presentation on how simple investment works. Talk about mutual funds. Talk about IRAs and 401(k)s. Talk about how to end negative cash flow. Talk about diversification and spread betting. Anticipate their questions and make sure you have good answers prepared ahead of time. Don’t insult their intelligence, but try to have an explanation ready that a 10-year-old could understand. If you speak clearly, they’ll feel excited, not intimidated, by the material.
- Offer to Walk Them Through a Preliminary Investment. Now that they know a little bit, offer to help them put their money where their mouth is. Suggest that it is time to actually make a first investment. This may very well be an IRA. Because IRAs are easy to set up, and not even terribly time consuming, this may be a good project to share with them. An IRA is a scary set of initials for someone averse to investment jargon. By helping them get the ball rolling, you’ll be setting them up for longterm success.
These three steps may be enough to help a new investor get their feet wet. If they want, and you’re willing, you may find yourself in a position to give advice and help for a longer period of time. This can be a really wonderful relationship, by which you offer meaningful, life-changing help to someone you really care about.