Newsletter: January, 2012

The Vault, January 2012: What do to with a windfall
A fat birthday envelope from Grandma…winning a prize…finding a $20 bill on the ground…wowie zowie!  You got a windfall! A windfall is a chunk of change that comes unexpectedly.
When you get a windfall, it’s likely your first thought is, “What should I spend it on?” You’re not alone. Lottery winners are twice as likely as the general population to go bankrupt!
While there’s nothing wrong with treating yourself, consider other options as well—especially if the windfall is large. Investing a wad of cash now can bring you big returns in the future.
Video of the Month
Waiting for a windfall? Maximize your allowance instead! Here’s Lady NaNa with some good advice–in musical form…
Biz Kid$ Interview

13 year olds Jordan Williams and Brandon Iverson operate two businesses: Kids Toys Inc. (which they started at age 10) and Making Money for Teens where they sell CDs that teach teens about financial topics like investing and starting a business (

check out their Web site,Facebook page, and Twitter feed.


They got a windfall from their successful business and decided to invest it.

How do you manage everything?
Jordan: It’s a lot of work having to manage school, sports, and business at the same time, but it’s a good experience for later in life.
So, your businesses turns a good profit.
Brandon: Yes, plus we save money from chores, the business, and even a couple of acting roles.
How do you keep yourselves from just spending it all?
Jordan: We have to discipline ourselves. Since we run a business, we have to make sure everything is paid for first—CDs, Web site fees, and so on.
Brandon: Sometimes saving is hard when you want that latest iPod or iPad. But you have to look to the future. Having a business makes you more aware of that.
So you decided to do something other than buy stuff.
Jordan: We wanted to have money in the future for college expenses or to buy a car or whatever. We started doing research with our dads which type of investment. In the beginning of last year we both looked into a mutual fund, the Monetta Young Investor’s Fund.
Why did you choose that?
Brandon: Mutual funds are less risky than straight stock investment because they invest in lots of companies, which is diversification. The level of risk is not as high.
How do you learn about investing and financial stuff?
Our parents give us a lot of advice and recommend books, and we do a lot of Internet research. One of my favorite books was Robert Kiyosaki’s Rich Dad, Poor Dad. That gave me the initiative to want to be an entrepreneur.
What does the future hold for the both of you?
Jordan: I want to go to a business college, major in business and marketing, and own my own business.
Brandon: I want to major in business and technology and run different companies. I want to use the knowledge I have now to create new products to help spread the wealth to teens and help them become more successful.

Windfall Trivia!

  • New York Hotel heiress Leona Helmsley bequeathed her entire $12 million estate to her dog in 2007. (Source: ABC)
  • Ken Jennings is the highest-winning game show contestant in history, winning a combined $3,773,414.29 from 4 game shows. (Source: Wikipedia)

What should YOU do?

If you decide to invest your windfall, there are lots of options: stocks, bonds, mutual funds, savings accounts, individual retirement arrangements (IRAs) and more. Here are three things to consider.
  • TIME: How long can the money be put away? If you need it soon, consider a savings or money-market account. If you can wait a year or longer, a CD or bond might offer better rates.
  • RISK: How much risk can you handle? FDIC-insured savings accounts are practically zero risk, but won’t provide much of a return. Investing in stocks can provide higher returns over time, but you can also lose your shirt.
  • TAXES:  Each investment is taxed differently so find out first how your return on the investment is going to be taxed. If you’re starting to save for retirement (it’s never too early!) Roth IRAs are great for kids — your investment grows without being taxed, and the money can be withdrawn tax-free once you reach 59 1/2 years old.