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Author: markyfool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 2674  
Subject: Pay Yourself Date: 11/29/2001 2:20 PM
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My best bit of advice to any teen who's interested in getting ahead financially is simple-- pay yourself first. This is way beyond a simple savings account, or money you're stashing for a car, college, or some other creature comfort. And to make it even simpler, I would strongly advise that self-pay go into the simplest of all investment forms-- a low-cost index fund. By doing this, you don't have to keep track of stock quotes or company news, which leaves time for more important social issues (like what's happening this weekend!!!). By paying yourself first into an index fund, a whole bunch of good things happen--

1. A broad-based index fund, over time, outperforms a majority of the managed mutual funds in America.

2. You let the power of compounding work its magic for you. Your hard-earned stash will appreciate slowly in the beginning years, and then as the amount grows larger, a simple 4%, 6%, or 10% gain starts looking pretty tall with a few zeroes on the end.

3. As a rule, index funds have low management costs and low tax bites. This way, more of your funds stay invested, which pays bigger dividends down the road.

4. By investing periodically in an index fund, you don't have to worry about timing the market highs & lows. Can you say dollar-cost averaging, boys & girls? Of course you can...

5. And finally, when this whole scheme comes to fruition, wouldn't it be fun to just once have the finds to loan to your parents when they're short on dough?

And all this wonderful stuff comes from one simple idea- paying yourself first..

Good luck,

MS
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