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Entrepreneur Eric Malka had to completely change his mindset when he sold his company and became an investor. Since then, he has learned many lessons that he now passes on to his children.
When The Art of Shaving, which Malka and his wife Miriam Zaoui founded in 1996, was acquired by Procter & Gamble in 2009 for $60 million, Malka knew he needed to educate himself. I noticed that.
“If an entrepreneur like me is lucky enough to host a liquidity event, we are faced with managing assets without proper training,” he told CNBC on a video call. Ta. Investors need to be patient and focus on long-term gains, while company founders often focus on short-term plans, “almost the opposite,” Malka said.
He took courses in wealth management, read books on investing, and now has a diversified portfolio of stocks, bonds, private equity and real estate, with about 10% allocated to riskier investments. In 2014, he founded a private equity fund, Strategic Brand Investments.
The lessons you learn when you lose are more valuable than the lessons you learn when you succeed.
Eric Malka
Co-founder and CEO, Strategic Brand Investments
When it comes to educating her children (her sons, ages 14 and 16) about money, Malka has always tried to help them learn the basics.
“One of the challenges I faced with teenagers when I was young is that they believe they can easily make money investing through social media and stories from friends,” he said. . Malka said her eldest son thought he could earn 20% a month, which he said was “very concerning.” So Malka let her son invest a small amount of her savings, hoping it would be a learning opportunity. And the son lost 40% of his investment trading currency futures.
“I hate to push kids to fail, but sometimes the lessons learned from a loss are more valuable than the lessons from a success,” Malka said.
This is a point echoed by Gregory Van, CEO of Singapore-based wealth platform Endus. He and his wife have children ages 8, 6, and 3. He said he wants to teach them the importance of making mistakes when the stakes seem high to them, even though they may actually be small. “The emotional strength and humility necessary to be a good investor is something people need to cultivate in themselves,” he said.
teach children to invest
For Deizi Olarte de Canavos, president and co-founder of real estate company Flag Luxury Group, educating children about money early on is key.
She and her husband allocated “low-risk” amounts of money to their three middle-school-age children so they could choose which companies to invest in. “The kids chose Apple, Amazon, Google, and Alibaba, and all but one did great.” As long as they keep their money in the market and continue their thoughtful approach, we’ll continue to grow every year. We continued to multiply their eggs,” she told CNBC in an email.
Olarte de Canavos said his experience investing in real estate taught him the importance of patience. “It influenced my business approach to emphasize long-term strategy over short-term profits,” she said. The mother of three says her investments in the stock market are “very conservative in order to best manage the huge risks I take on in the real estate business.”
Please give your child pocket money by the first grade at the latest.
Daysushi Olarte de Canabos
President and Co-Founder of Flag Luxury Group
She suggested having kids explain why they want to buy certain stocks. Doing so, she said, “demystifies investing and makes it an exciting and integral part of education.”
Vann said he talks to his young children about the trade-offs of investing on their own terms. “I ask them, ‘How would you feel if you invested this $100 and it went down $70 next year?’ “Would you rather spend $100 on a toy today or 10 years from now when you’re 16? Would you like to make it $200?” Van told CNBC in an email. “Surprisingly, they are very rational and always seek delayed gratification,” he said.
Van and his wife have investment portfolios for each of their children, mostly made up of gifts they receive during holidays such as Chinese New Year. “Given their long investment horizons, they have very diversified, multi-manager, low-cost stock portfolios,” Vann says, adding that whenever children are asked, The performance is shown as positive or negative.
Budget and save for your children
Malka says age-appropriate advice is very important. His current focus is on teaching kids how to budget and giving them a fixed allowance each month.
“In the beginning, they were spending in 10 days what they should have spent in 30 days…Now I’ve been doing this for eight or nine months, and now they’re really managing it properly. It’s a skill that they don’t realize they’re being taught,” he says. He recommended a book called Raising Financially Fit Kids by Jolyn Godfrey, which offers advice for each age group.
“Give children pocket money by the first year of school at the latest,” Olarte de Canavos suggests. “The purpose of pocket money is to help children make their own money decisions and deal with the consequences of their choices,” she told CNBC. “As your children grow up, teach them about savings, the concept of interest, and the difference between good and bad debt,” she says.
For Roshni Mahtani Cheung, CEO and founder of media company The Parentinc, long-term thinking is important. She and her husband opened a savings account for the money their 8-year-old daughter receives for Lunar New Year and gold coins for Diwali. “My goal is for her to grow up to be financially savvy, confident, and able to make her own decisions,” Mahtani Chan told CNBC via email.
Talk to children about their inheritance
The concern for wealthy members of advisory network Tiger 21 is when and how to talk to their children about their inheritance. “They are most concerned about their children living independent and productive lives, and they are concerned about their children’s inheritance,” Michael Sonnenfeld, founder and chairman of Tiger 21, said in an email to CNBC. “We don’t want knowledge of wealth to distract us or lead us astray.”
About 70% of the network’s members say they want to wait until their children are nearing 30 and have established careers detailing what they will take over and when that will happen. said Sonnenfeld. “However, about 30% of members want to start instilling their children in their late teens or early 20s to be responsible stewards of the wealth they inherit,” he said. . Both approaches are valid, he added.
“I encourage parents to encourage open, values-based conversations about money and investing,” Sonnenfeld says.
