Early Life Investments
A Family Financial Head Start
“The best time to build lifelong money habits is when you are young. The second-best time is today.”
“The best time to build lifelong money habits is when you are young. The second-best time is today.”
From the Blog — June 30, 2026
Even a $130,000 family is falling behind as groceries outrun paychecks — while the households that own stocks pull further ahead. The case for owning the whole market through a low-cost index fund, and why it matters most for your kids.
Two stories landed on the same morning this week, and read together they tell you almost everything about how to think about money in 2026.
In The New York Times, Lael Brainard (former vice chair of the Federal Reserve) and Rohit Chopra (former director of the Consumer Financial Protection Bureau) shared survey research on 1,000 households. Their model family — two parents, two young kids, earning $130,000, well above the ~$83,500 national median — has watched the math stop adding up. After covering only the basics, that family is now more than $1,000 worse off than 18 months ago. Rising costs more than erased their wage gains and tax cuts. By nearly four to one, people said it was prices, not lagging paychecks, driving the squeeze — and groceries topped the list, with beef alone up roughly a third in two years.
In Fortune, Moody’s chief economist Mark Zandi described the other half of the picture. The wealthiest 20% of American households now account for 60% of all consumer spending — and they are thriving, propelled by a soaring stock market. Why them? Because, citing the Federal Reserve’s own data, Zandi notes that nearly 90% of all stocks and mutual funds are owned by that top 20%. When markets rise, they feel richer and spend more. Economists call it the “wealth effect.”
Notice what the two articles have in common. The struggling family in the Times piece earns more than three-quarters of American households. They are not poor. What separates them from the households pulling ahead is not the size of their paycheck — it’s that their financial life runs entirely on wages, while the upper arm of the K also runs on capital. One income stream is fighting inflation uphill. The other is compounding.
If your money comes only from your work, you feel every price increase. If some of your money comes from owning the businesses raising those prices, you are on both sides of the receipt.
This is the quiet truth behind “the rich get richer.” It is rarely a secret strategy or a hot stock. It is the boring, decades-long fact of ownership — and ownership is no longer gated behind a private banker. Anyone with a brokerage account and a few dollars can buy the entire U.S. market in a single fund.
An S&P 500 index fund buys a tiny piece of roughly 500 of the largest U.S. companies at once — Apple, Microsoft, the grocery distributors, the banks, the energy producers. You are not betting on one winner; you are buying the whole field. Three things make it the workhorse of ordinary wealth-building:
This is why Warren Buffett has recommended the same thing for decades: for most people, a low-cost S&P 500 index fund held for the long run. He has instructed that 90% of the trust he leaves his wife be put in exactly that. And the long arc backs him up: according to Crestmont Research, every single 20-year holding period in the S&P 500’s history has ended in positive total returns. Not most — every one.
If the 0.03% expense ratio on a mainstream S&P 500 fund sounds already negligible, Fidelity took it one step further: their ZERO index fund lineup charges literally nothing — 0.00% expense ratio, no minimums, no fees of any kind. Four funds cover essentially the whole world:
The catch: ZERO funds are only available inside a Fidelity account — you cannot hold them at Vanguard or Schwab. But for a family opening a new brokerage, IRA, or custodial account, that is not much of a barrier. Paying zero in fees means every dollar you invest is 100% working for you from day one. For a family just getting started, FNILX or FZROX paired with a Fidelity custodial account is one of the most cost-efficient ownership structures available to an ordinary household.
Owning the market is powerful, not magic. A few truths to hold alongside the optimism:
Here is where the K-shaped economy becomes a parenting issue. The single greatest advantage your child has over you is time — decades more of it for compounding to work. Putting a broad index fund to work early is how you place a child on the upper arm of the K before they ever earn a full-time paycheck.
The good news is that the best accounts for kids are built for exactly this:
If you want the broader playbook for turning a child into an owner, start with our guide to raising money-savvy kids and our teen & college resources.
If your household follows the Dave Ramsey Baby Steps, you already know Baby Step 4: invest 15% of household income for retirement in “good growth stock mutual funds.” A low-cost S&P 500 index fund is, for most families, the simplest and cheapest expression of that idea — broad ownership, minimal fees, no stock-picking required. Ramsey gets the adults investing; ELI extends the same ownership principle down a generation, so your kids are compounding owners while they are still kids. If you want the seven rules that govern where and how to invest those retirement dollars — account types, contribution limits, and how to sequence employer plans against IRAs — our investing for retirement guide covers every account type your workplace may offer.
This week’s headlines describe a country splitting into people who own assets and people who only earn wages. You do not have to be in the top 20% to own what the top 20% owns. A single low-cost index fund puts the entire American market in your corner — and started early for a child, it is the closest thing there is to handing them the upper arm of the K. You cannot control the price of beef. You can decide which side of the receipt your family is on. The books that help us teach our own kids why ownership matters are collected in our book reviews — a readable book a child actually finishes often does more than any single account ever will.