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I’m 12 and in 7th grade. My parents are divorced and I earn $10 a month from my podcast. Should I invest in stocks?

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I am 12 and in the 7th grade. I run a small podcast and make $10 a month. I am thinking about investing in stocks, but I don’t know if I should. Me, my mom, sister, and brother live in a duplex with another family. My parents are divorced and we see our dad every other weekend and on holidays. I am thinking of investing in stocks with my podcast money.

But should I? We are using MarketWatch to learn how to trade stocks and stuff at school, but we start off with $500,000, and I would be starting off with maybe $10 or $20 dollars in my account. I know how to find a good stock and invest in it, but I don’t know if I should. I have read some of your articles and have decided to ask you for a straight answer.

Sincerely,

A Young Podcaster

Dear Podcaster,

I specialize in straight answers, so you have come to the right place. Should you invest in the stock market? Yes. Your letter gives me hope. I am glad you are learning about investing in the stock market at school, and using MarketWatch to do so, and about the value of money and having a stake in an economy that supplies jobs, services, goods and, ultimately, puts food on our tables.

It will teach you the value of risk and reward, patience and discipline, and how to weather a storm like a pandemic and a roller-coaster year for markets. Rule No. 1: Don’t panic. Rule No. 2: Don’t panic. Rule No. 3: Don’t panic. When you don’t know what action to take, and you feel fearful, it’s often better to take no action at all. That is true for investing in the stock market, and for life.

You are too young to set up an account yourself, but your mother or father can open up a custodial account on your behalf under the Uniform Transfer to Minors Act (UTMA) or Uniform Gift to Minors Act (UGMA). You will be able to take control of the account when you reach 18 or 21, depending on what state you live in. Perhaps your mother, as you live with her full time, can help you with that.

TD Ameritrade, E-trade, Merrill Edge
BAC,
+1.31%
,
and Robinhood all have custodial accounts with no minimum-fee requirements, and no trading fees, inactivity fees or annual fees. Start off reading up on stocks that you know and like, and see how they are performing, what risks could push stock lower, and their growth trajectory that give an indication of how they’re likely to perform.

There are also several books out there for young investors such as yourself. “Yummi Yoghurt: A First Taste of Stock Market Investment Hardcover” (2019) by John Lee is accessible. Ditto “Go! Stock! Go!: A Stock Market Guide for Enterprising Children and their Curious Parents Paperback” (2014) by Bennett Zimmerman. They may make some good stocking fillers, if you request early.

The Moneyist:‘I lost my mom 2 months ago and I’m still in a fog’: My brother and his family moved into her home. They want more than half

Start low, go slow, and by the time you reach your teenage years and take on a part-time job, for example, you will have an appetite to grow you holdings. My colleague Philip van Doorn dishes out some encouraging math on how your investments can rise over time. “Imagine how much bigger it might be if you can increase that automatic investment over the years,” he wrote.

“Let’s pretend that you have a child who is 11 years of age, and you invest $2,500 for him or her in an index fund, along with regular investments of $100 a month (starting the first month),” he added. “Using the future value formula in Excel, with an assumed annual 10% return for the fund, after 168 months (or 14 years), when your child is 25, he or she will have $46,460.28 in the account.”

As Philip suggests, you could even ask your parents to gift you a deposit in one such custodial account for the holidays. It’s a great learning curve for your parents and you. “There’s also a need for parents to explain financial matters to children. How much do things cost? What did you have to sacrifice as a young adult to afford a home or otherwise get where you are now?”

“I realized that once a child in our electronically connected age reaches the age of 11 or 12, or thereabouts, he or she no longer has much interest in traditional toys or games, and there are limits to how many games they want for their X-Boxes, etc. There are also limits on how many electronic devices you can buy for them,” he added.

You can start by investing in stocks, products and services that you know and like, and as your investment grows and your earning potential increases, you can move to an index fund or exchange-traded fund (ETF). You may also be interested in sustainable investments in companies that aim to help the planet and/or prevent further damage to it. The world is your oyster. Your future awaits.

In 10 years time, please get in touch and let us know how you’re doing.

Quentin Fottrell is MarketWatch’s Moneyist columnist. You can email The Moneyist with any financial and ethical questions at qfottrell@marketwatch.com. Want to read more?Follow Quentin Fottrell on Twitterand read more of his columns here.

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‘I could live on my Social Security and still save money’: This 66-year-old left Chicago for ‘calming’ Costa Rica — where he now plans to live indefinitely

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Editor’s note: This article was first published in September 2019.

A school break changed 66-year-old Martin Farber’s life forever.

In 2007, his daughter — who at the time was attending Illinois State University — decided she wanted to spend a college holiday volunteering in Costa Rica and staying with a local family, he explains. She came home raving about the experience, so, in 2008, Farber — who at the time was living in Evanston, Ill., just outside Chicago, and selling cars — took his first trip there.

“It was a big surprise to me — bumpy roads, dogs barking in the streets,” he says. “I wasn’t enamored at first.”

But as his daughter began traveling there more and eventually moved there for a year, he took additional trips to Costa Rica. It quickly grew on him — in particular, the people. “The Costa Rican people are warm, open and friendly. I felt less invisible in a strange country in a strange town where I didn’t speak the language than I did in Evanston.”

And the more time he spent there, the more it impacted him: “On one of my trips there, I thought: My daughter’s life makes more sense than mine,” he says. “There was nothing wrong with my life, but I felt that my life was out of context with who I’d become. … I would have bills and make money to pay them, but that had ceased to be satisfying,” he recalls. “I knew I needed to change my life — there was no more joy in what I was doing.”

What’s more, when he’d return from his Costa Rica trips, people noticed. “I would come back, and my friends and therapist would say: You seem better after you go,” he says with a laugh.

A view from the hot springs near Martin Farber’s home in Costa Rica.


Martin Farber

So in 2014, he packed up and moved to Orosi — a picturesque, lush small town with waterfalls and hot springs a little over an hour’s drive from San Jose — promising himself he’d stay for two years. It’s been five, and he now plans to stay in Costa Rica indefinitely. (Though Farber notes that, to him, “it’s not a retirement; it’s a chance to lead a new and different life.”)

Here’s what his life is like, from costs to health care to residency to everyday life:

The cost: While many expats spend way more living in Costa Rica, Farber says: “I could live on my Social Security and still save money.” He says “a person can live on $1,200 per month, two people on $2,000.” The key, he says, is to live more like he does and as the Costa Ricans do — in a modest home, eating local food and purchasing local goods.

Indeed, Farber himself spends just $300 a month for rent (he rents a home from a friend who moved recently and gave him a good deal), roughly $225 a month on groceries and just $50 a month total on water and electricity (the temperate climate in Orosi means you rarely need heat or air conditioning). The veteran Volkswagen
VOW,
+0.96%

 
VLKAF,
+0.98%

salesman saves money by not owning a car (those over 65 ride municipal buses for free), which can be a significant expense in Costa Rica; for his cellphone, “I pay as I go … roughly $10 may last me a couple weeks or more,” he says, adding that “many people handle there their cellphones this way. You can get them recharged anywhere.”

His major expense is travel: He goes back to the U.S. to visit his mother in Florida several times a year and lately has spent part of the summer in Chicago helping out a friend with a dealership there. He also spends a good amount of money on health care. He says that while flights can be had for as little as $350 roundtrip during offseasons, the cost can be much higher the rest of the year.

In the saddle.


Martin Farber

Health care: Farber, who has permanent resident status in Costa Rica, says he pays about $90 per month to participate in the country’s health-care system — adding that the health care he’s received has been very good. (A 2018 study of health-care quality and access in more than 190 nations ranked Costa Rica No. 62.)

When he developed a detached retina, though, he paid for the procedure out of pocket so that he didn’t have to wait for the required surgery, he says — adding that the entire procedure cost him about $5,000. “I would have had to have waited four days,” he says, if he had not paid to expedite matters. “That might have been fine, but it might not.” And he adds that the quality of care depends on where you get it in the country.

Lifestyle: Though Farber says that he “moved here with no goals and no agenda,” he’s found plenty to do. “I take Spanish lessons two days a week for two hours a day. It’s been great. I never thought I would acquire a usable language in my 60s,” he says. He also rides his bike all around the area, does some writing and belongs to a community group that undertakes projects to improve the area.

And he often simply takes in nature, which he says has been an essential part of why he feels calmer and more relaxed in Costa Rica than in the U.S. “I live at 3,000 feet but in a valley surrounded by coffee fields and lime trees and water. At night, if I open the windows, I can hear the river rushing by,” he says. “It is very calming … hundreds of trees everywhere … you know the Earth is alive.”

The historic Iglesia de San José de Orosi.


iStock

Cons: “I don’t want to overglorify. It’s not without its problems,” Farber says of Costa Rica. “There are social problems and downsides.” He notes that crime and petty theft can be a problem (“I am cautious,” he says of his approach) and seem to have increased since he moved there, and adds that he misses out on some cultural things because of where he lives. And, he says with a laugh, “I can’t order Thai food at 9 at night.” But, he adds: “These are trade-offs — in the afternoon, I get to walk in the coffee fields and see flocks of parrots.”

Residency: To qualify for Costa Rica’s pensionado visa, expats must prove that they have a pension of at least $1,000 coming in each month. (Here are the details of that program.) Once you have lived in Costa Rica for three years, you can apply for permanent residency. Farber used a lawyer to help him figure out the ins and outs of residency options; his entire path to permanent residency took about a year, he says.

The bottom line: “After five years I am still amazed and surprised that I made the decision to lead a life I never thought I would,” he says. And while he may not stay in Orosi forever — “the town doesn’t have an ambulance, [and] I don’t know what it will be like to be 80 there,” he says — he does plan to stay in Costa Rica in no small part because of the people and sense of community. “I have the feeling that life is good here,” he says. “It’s hard sometimes, but we are all in it together.”



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Mutual Funds Weekly: These money and investing tips can help you read the market’s signs and stay on your path

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