A leader explains why teaching employees about compound growth and dollar cost averaging matters. He shares how he taught his own kids to invest, and argues that teams who understand money stay loyal and succeed.
I was talking to a very successful entrepreneur the other day and he said that he really regrets not growing up in a family where someone taught him about investing. You know, there was no one to actually teach him about compound growth or dollar cost averaging or where to invest his money and how to invest his money. And all he's ever done is work really, really hard and placed it in mutual funds and kept his fingers crossed. And I'm not a wealth manager, I'm not giving investment advice. And that's not even an earnings claim. I have seven nieces and Neph and two kids. My two boys are 21 and 23. My 23 year old has a very blue collar job, works part time in the trucks at 1-800-got junk and works on film sets doing whatever they'll give him to do. So very kind of entry level, you know, not quite minimum wage, but he's certainly not making more than 24 bucks an hour, 25 bucks an hour. At 23 years old, he's got $187,000 saved already, which is pretty good for a 23 year old kid to have $187,000 saved. 40,000 of that is in bitcoins which he's been investing in every week for the last six months. But he's investing in Bitcoin for the last three years. He's got about 40,000 of that in Nvidia stock which he started buying every two months and he started buying that 50 months ago. So 50 months ago he started investing in Nvidia. Microsoft, Apple, Google and Meta just decided to pick kind of the Warren Buffett technology stocks, right? The very kind of classic blue chip not going away companies and just keep buying. And every time that there's a dip in a market like bitcoin has really kind of crashed or corrected in the last two days. He calls me and he's all excited because he feels like it's, you know, BMW putting a Black Friday sale price on BMW cars. He's like, BMW cars are amazing. Why wouldn't I go buy one if they're 20% off? Whereas everybody else on the street tend to panic, he gets greedy. And that's kind of the Warren Buffett, you know, advisory stuff. So I think it's really important for us as leaders to just wrap our head around this. Not just for us, but more for our team. Actually, I created for fun what I just called a compound growth calculator. And I just wanted to show the basics of investing to somebody. And I said, look, if you just invested $10,000 a year, $10,000 a year for 10 years. If you started at 20 and you invested $10,000 a year for ten years, by the time you're 60, you would have invested $100,000 total. But if you were getting 10% growth a year, your compound growth, meaning the amount of money that you put in every year starts to grow. And then that BAL grow. By the time that you are 60 years old, your $100,000 is now worth 3 million, the basic compound growth of every year. Boring. 10% growth. Your portfolio continues to grow by 10%. It's now worth 3 million bucks. So I showed my kids that. They got supering excited. But then I showed them this. I said, look, if you don't start investing at 20 and you wait until you're 30 and you invest $10,000 a year for 30 years, so you invest from 30 to 60, you will have invested 300,000 of your money. And at the end when you're 60, you're going to have $1,800,000. So you invested three times as much, and in the same time period, you have $1.5 million less. What would you rather do? Yes, I have a group coaching program for CEOs. And the beauty of my group coaching calls is you actually get to ask me questions on every call. You're not just listening to other CEOs. Drop me an email cameronameronherrell.com for more information. My two kids were like, this is crazy. We got to start investing. So the general rule of thumb I gave my two kids, and this is what I'm suggesting, is that you try to train your employees in this. Our employees have no access to parents that are teaching them or spouses that know this. But if you give your employees the core basics of teaching them compound growth, teaching them some basic investing strategies, teaching them. What I told my kids was when they live at home, put 50% of every paycheck, invest it. And the other 50%, they can go buy clothes, they can go buy video games, whatever they want. But when they live under mommy and Daddy's house, 50% of everything they ever earned gets invested. Whether that's delivering newspapers, cutting grass, you know, babysitting money. 50% gets invested. And then I help them to feel confident in investing. So when they move out of the house, I teach them to invest 15 or 20% of every paycheck in investing so that they live off the other 80%. So I'm teaching them to live within their means. I'm teaching them to invest. I'M teaching them to buy quality. I'm teaching about compound growth and then I'm teaching them about dollar cost averaging. That if you just keep buying the same quality things, if the price goes down, it's like BMW having a sale. Great, go buy another BMW. You know they're going to be going up, you know, or go buy quality things. Don't worry about the up and down because you're just going to keep buying whether it goes up and down over the next 10 or 20 or 30 years. Those basic things were the ways that I taught my kids. But the last thing I did was a lesson I got from my dad when I was 16. My dad said, if you go down to meet my stockbroker for an hour and you talk to my stockbroker and he'll teach you about the markets. Whatever money of yours that you invest, as long as you hold it for three years, you pick the stocks. You hold those three stocks for three years. If they fall in value at the end of three years, I'll give you your money back. So if you put 5,000 in, worst case scenario, three years from now, I guarantee you'll have $5,000. If the stocks go up over three years, you get all that money too. So I was like, this is great. Rather than keeping my five grand in the bank because he taught me I was losing money against inflation, I invested my stocks. A couple went up, a couple went down. But I was, at least I understood the basics. That kind of and of. If you spent that time with your employees, teaching them about investing, about compound growth, about dollar cost averaging, about buying quality, and if you just said invest some money and I guarantee there won't be any downside for you, that's better than a 401k matching program, that's better than some of the perks that you have internally in your company. And it goes back to the book the Dream Manager, where if you care more about your employees personal dreams and personal goals and their fears and their insecurities than anybody else, if you care more about them than their family do, your employees will go through brick walls for you to build your company. So I've been thinking a lot about this as leaders, but that's the stuff that we can bring to the table to teach our people. And it's better than most of what we do today.
