Less toys and more Index Funds By Prince Dykes

01 / 17 / 19

“Someone’s sitting in the shade today because someone planted a tree a long time ago.” -Warren Buffett 

Happy New Year! I spent the holidays like most people with family, gifts and cheers. The last few days I’ve spent taking down decorations, cleaning up gifts wrap paper and putting up toys. During the month of December I couldn’t help but notice the stock market performed poorly — down 9%. Knowing the market historically goes up over a long period of time I viewed this as a buying opportunity to plant a tree.  As I watched all of the toys under the tree for my son it hit me “Less toys and more Index Funds”.    

Gallup reports that “US adults estimate that they will spend approximately $885 on gifts in 2018.” Imagine if we “reduced” the amount of gifts on holidays and birthdays and invested it for our children, nieces or nephews. For example imagine if instead of spending $300 on Christmas, I spent $200 on Christmas and invested $100. Lets be honest, the toys I brought for my son on Christmas for $70, I would be lucky to sell for $5 at a yard sale by the summer. But, the money I invest I don’t know what it could earn. My point is that the toys we buy our children today are mostly likely a guaranteed lost. On the other hand the money we invest could earn dividends and could become profitable. I already know what you are thinking….”Prince, What should I invest in?” For me it would be a low cost, no commission index fund that tracks the S&P 500.  I’m not recommending an investment but me personally I currently purchased “Schwab S&P 500 Index Fund”, because of the low expense ratio .02%, cost @$36 and pays an annual dividend of 1.66%. It tracks the S&P 500 which is a basket of 500 of the largest U.S. stocks. 

People always say I would invest but I don’t have the money or I don’t know what to invest in. With most Americans spending $885 on Christmas in 2018 I think we just found the money to invest! I hope you had a great holiday season and may 2019 be your best year yet.