A close family member is a schizophrenic. It’s been a very hard road for her. The drugs necessary to give her a rather tentative grasp on reality come with truly horrendous side effects. Her general health suffers from the alleged semi-cure. The situation has become dire in recent months as the drugs are not as effective as they once were.
Yesterday, I learned of a new drug trial which may offer a beacon of hope for my cousin and our family. A relative young Israeli drug company will be completing the second stage trial by the end of June and from what I was able to read it looks very hopeful.
I was discussing the information with my daughter the Last Amazon who made a rather startling request for a 15 (and soon to be 16) year old. Now that she is a working member of society she wants to set up a stock portfolio. She’s been working since May part-time and has been saving at least half (if not more) of her paycheque every week. She wants to take half of her savings and invest it in the stock market. She is more interested investing in companies who are in the start up stages of new drugs and technology with an eye to long-term investing. If that wasn’t unusual enough - she presented me with a written mission statement of her investment goals.
She has never taken a business course or attended a financial planning seminar. Most of her secondary school courses are heavy on the math and sciences side. Nor am I an investor unless you count the time and attention I have spent investing in my children. I somehow don’t really think that qualifies me as any kind of financial maverick. I am not sure where she gets these ideas from and there are times when I feel truly out of step with most of my parental peers.
I remember being a teenager and my mother cursing me by saying she hoped I would one day I would have a daughter just like me so I could finally learn what it feels like. Even then, I recognized I was a horrible daughter and decided I would never have children so I wouldn’t be in danger of getting my own back. Instead, I got the Last Amazon and her brothers who I stand in awe of. My mother and I joke that the Last Amazon is who we would to be when we grow-up.
I have done nothing, absolutely nothing to merit the wonderful children I have been blessed with and I am at a real loss to understand it. In fact, the situation frightens me as it’s been through my children that I have discovered the true extent of my inadequacies not only as a human being but as a parental steward. All of which leads me to believe G-d has an incredible sense of humor but I am far too afraid to laugh.
2 comments:
My advice is dump the max percentage (18%) into an RRSP after the first year of employment. Whether you want that to be stocks, mutual funds or fixed-return instruments is up to you and your financial advisor. The important thing is that this is a tax shelter (and retirement income) that's never too early to start, and you get to keep some of your money out of Canada Revenue's hands.
Then put 10% into a long-term non-registered savings account -- again, whether that's stocks, mutual funds or what-have-you is up to you. This is for saving toward say, a car or a house. Don't touch this until you hit your desired total.
Put another 10% into short-term savings (for vacation money, iPod/trinkets etc). This guy you can empty out once or twice a year.
This is assuming she has no debts or bills. If she has regular bills to pay, the best strategy is to take the 20% devoted to long/short term investing and save up 6-8 months of salary as a hedge against unemployment, put it in something relatively non-volatile, and then direct the 20% back into the long/short term savings plans. If she has debts, same plan. Direct the 20% to debt payment immediately, once the debt is paid, build up a 6-8 month hedge of "unemployment funds", then redirect back to the long/short term investing.
As far as stocks go, ETFs and index funds tend to be the best performers over the long term (20-25 year span). Since they are comprised of stock issue sampled from many of the same firms that make up a specific market (TSX, NYSE) their returns are generally comparable to the index's overall ups and downs over time.
Start-ups are kind of touch-and-go and most starting investors should leave that sort of thing to the VCs who have the money to burn and won't miss it if the proto-pharma crashes and burns. Pharma is a notoriously volatile market to invest in at the inception stage because you are gambling on 1) the size of the market for their drug and 2) the drug clearing FDA / Health Canada approvals. Read this great Economist blog article for more details on the risks of biotech/pharma investing.
She should get a good financial advisor and talk it over with them.
There's also a good blog called Canadian Capitalist who covers a lot of investment instruments and seems pretty knowledgeable.
Wow, Chris, my eyes are glazing reading this over - I'll be sure to pass on this to the LA when she gets home to work. I think I will bring the LA to the next blog meet-up so you two can talk finance.
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