3 Things Our Dads Taught Us About Investing

Maybe you grew up with the fun dad — the one who was always cracking jokes, starting water balloon fights in the backyard, and letting you stay up past your bedtime. Or maybe you had the strict dad — the one who enforced household rules, took your teachers' side over yours, and set high expectations for you from the start.

No matter what your father's personality entails, chances are he did a good job of teaching you about money. In my case (this is Maurie), my dad not only taught me about money, but investing as well. Here are some key lessons my colleagues and I picked up from our fathers.

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1. Don’t fear the stock market

Maurie Backman: Like many people I know, it took me a while to start investing in stocks, and the main reason was that I needed the cash I had saved for other things, like building an emergency fund, paying off my student loans, and putting a down payment on a house. Once I checked those items off my list, I figured I'd be ready to start investing, only I still didn't do so right away, and the reason boiled down to a fear of losing money.

It's a good thing my dad stepped in. He helped me realize that stock market volatility is not only a normal thing, but a predictable thing, and that the market, over time, has a tendency to rise. He also told me that investing in stocks required patience — that maybe I wouldn't see such a big payoff initially, but that over time, I would.

I'm really glad I followed his advice, because had I waited longer to start investing, I'd be sitting on a smaller portfolio balance today. Just as importantly, I learned how to go with the flow as far as the stock market is concerned, and that's helped me avoid losing sleep during periods of upheaval.

2. Markets are irrational — don’t chase the “next big thing”

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Matt Frankel, CFP: When I was growing up, my father was (and still is) a computer engineer with a major tech company. In the late 1990s, the stock of every company with an internet-related business was going through the roof.

Many people couldn't seem to get their money into the market fast enough. I was a young adult at the time, so some of my friends were getting in on the action. Knowing that he was a tech guy himself, I asked my dad why he hadn't mentioned any big tech investments of his own. Essentially, he said that the only real way to get rich by investing is slow and steady growth — the massive gains and sky-high valuations in tech stocks weren't realistic, nor were they sustainable. He cautioned me to be extra careful when I saw easy money being made.

He was right. In early 2000, the dot-com bubble finally burst. By late 2001, the tech-heavy Nasdaq Composite index had lost 70% of its value and many once-hot internet stocks were completely worthless, wiping out many investors' accounts entirely.

Now, I can spot the telltale signs of an irrational market from a mile away. For example, in 2005, when I was still in school and making about $25,000 per year working at a restaurant, I was offered up to $300,000 in financing to buy investment properties. Even though real estate was going up in value at a dramatic pace, I knew there was something wrong.

I've certainly made my share of financial mistakes, especially in my younger years. However, I can honestly say that I've never chased an irrationally priced asset. I didn't put money into real estate in the mid-2000s, even though I saw some of my friends making hundreds of thousands of dollars (on paper), and I didn't lose money in the cryptocurrency craze. I have my dad to thank for that.

3. Don’t invest in anything you don’t understand

Christy Bieber: Like Matt's dad, my own father had a lot to say about investing. But instead of focusing on the irrationality of the markets, his big lesson was not to buy any investments that you don't fully understand.

When he first started investing, he listened to some advice from my mom's brother, who was a stock broker — and he bought some shares of companies based on that advice alone. He did this even though he didn't really know a lot about picking individual stocks at the time. The investments weren't a success, money was lost, and the whole situation created some family drama.

Determined not to repeat the mistake, my dad learned how to examine the fundamentals of companies he was considering buying shares in — and learned the importance of always understanding what you're investing in and not just relying on the "experts."

When I started earning money and investing, I was also tempted to buy shares of companies because I liked them or because they were recommended even though I didn't really know much about the details. He encouraged me to develop a sound investment strategy based on research and to make sure I wasn't buying any company unless I had a full understanding of past financial performance and plans for growth.

Today, I'm pretty careful about my investments and I research every asset I buy, from real estate to stocks, to make sure that I know how the price was determined and how it's supposed to make me money. And it's all thanks to this great advice from my dad.

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