The Top 5 Money Lessons I Learned from Dad

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Happy Father’s Day Weekend! Shout out to dads in general and to my dad in particular.

Dad and I are “2 peas in a pod” as the saying goes. I think he’s had fun teaching me about business and money because he knows I’m as interested in those topics as he is.

Dad’s been a stockbroker, a real estate investor, and a side hustler. So he’s had lots of personal finance experience and knowledge to pass along.

And today I’m going to share his advice with you! Here are the top 5 money lessons I learned from Dad.

1. Investing is a Must

Going through life without investing is just setting your future self up for failure! Investing is how you take $220,000 (saved over the course of your career life) and turn it into $1,203,031.

Dad got me saving for retirement as soon as I got a real job at 19 (by “real”, I mean working as a full-time receptionist instead of a part-time sandwich artist, so I’m playing a little loose with the term).

Now, I know our generation is all about building a life you love so you don’t have to retire from it. And that sounds like a great idea, but it’s also kinda BS. What if you get sick or injured and physically can’t work anymore? What if you get dementia and mentally can’t work anymore?

You might be forced to retire at some point. So make sure you start investing for your future while you’re young enough to take advantage of some higher-risk, higher-reward investments.

Learn more: 3 Easy Steps to the Retirement of Your Dreams

2. Leave the Stock-Picking to the Professionals

Dad was a stockbroker for decades. He literally spent over 40 hours per week buying and selling stocks.

So Dad knows how to analyze stocks. He can review prospectuses and evaluate the strength of a company’s stock. I can’t. And you probably can’t either.

So you and I have no business choosing individual stocks to invest in. We’d just be spinning our wheels and getting in our own way.

The far better option for us non-pros is to stick with index funds.

What are index funds?

Index funds are like sampler baskets of lots of different stocks or bonds. You’re automatically putting your eggs in a bunch of baskets in one easy step.

Oh and, unlike mutual funds, index funds aren’t actively managed, so you don’t pay the high service fees for index funds that you would for mutual funds.

But wait, wouldn’t you want to pay for active management because then your portfolio would perform better?

Weirdly, no. Study after study has shown that the passively-managed index funds usually perform better than the actively-managed mutual funds. And when you account for the higher fees of a mutual fund, the average investor is almost always better off with index funds.

Learn more: The Biggest Mistake Smart People Make with Their Money

3. Buy Real Estate

Getting back to that idea of preparing for your later years when you might not be able to work…buy a house!

Here’s the deal: rent will always go up. But your wages will not. And once you’re on a fixed income (like, say, a retired person), you really don’t want to be at the mercy of an ever-more-expensive rental market.

Buying a house now will give you options for later. You may decide to retire in that house and live rent-free (just paying taxes and insurance). Or you could sell that house to buy a cheaper condo and pocket the difference.

I can’t even tell you how many properties my parents have bought and sold. They used to own a portfolio of like 10 rental properties in my hometown (until the steel mill closed and rentals in that area were no longer as profitable). So I have great memories of landlord-ing with Mom and Dad: visiting the triplex with dad to make some repair or other, cleaning with mom after tenants moved out, painting a front porch at one point.

Ok, that sounds like more work than play, but seriously, it was fun.

And, until very recently, Mom and Dad owned a condo in Lake Havasu. They had a place to stay when they visited family there, and they made some money renting it out as a vacation rental the rest of the year!

So I got to use Dad’s real estate expertise when hubby and I bought our first house in 2012. Dad was in LA for work, so he went to the inspection with us and helped put some of our first-time-buyer fears to rest. PS: that property now brings in over $3,000/month as a rental!

Learn more: Three Reasons You Should Buy Real Estate (Even if You Don’t Want to Own Your Home) and Build Your Real Estate Fortune on These 5 Books

4. Find a Way to Build Passive Income

Want to make money while you sleep? People do it all the time! It’s called Passive Income, and you can do it too.

As long as you’re trading your time for money (like working as an employee or selling services), you’ll always be limited by 24 hours per day. But if you can figure out how to make passive income, your income potential goes through the roof!

Oh, and passive income also protects you in case you get too old or sick to keep working.

Believe it or not, we’ve already talked about 2 of Dad’s passive income streams: index funds and real estate. Index funds grow in value over time, effectively earning you money without your active involvement. And real estate can bring you rental income every month, with typically little work on your end (and if you don’t want to handle the landlord duties, you can always hire a property manager!).

There are lots of other ways to earn passive income. You could write a book, for example. Invest the time in writing the book now, and earn income for years from book sales. Or sell stock photos online. Or build an app.

For more info on these passive income opportunities (and several more!), check out 10 Passive Income Ideas for Girls on the Go.

5. Keep Learning

And rounding out the top 5 money lessons I learned from Dad: keep learning.

Dad’s made some serious life-pivots requiring new knowledge and skill sets. He went from 10 years in electronics repair to a brand new career as a stockbroker in the 90’s. He’s adapted to changing real estate conditions in rural IL. And now, he’s taught himself how to make money online through eBay sales.

It’s such a good life lesson for all of us. Keep learning and keep growing!

Here’s to Dads!