Business
Building a young business, with Legos
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Brothers Joshua and Harrison Herz have started their own business, building gifts out of Lego’s. |
Brothers Joshua and Harrison Herz most likely qualify as the youngest entrepreneurs ever in Carmel Valley, an area well populated with young people and fresh ideas.
Joshua, a second-grader and Harrison, a kindergartener, have their own business, J&H LEGO Gifts, with their own checking and saving accounts in the bank.
Of course, the check cards are signed with one name only. “They signed the back of the cards with big letters and there was room for their first name only, so I told them it was just like what the rock stars do,” said their father, Carmel Valley resident Henry Herz, who manages family software development for Defenseweb under contract with the Department of Defense.
Joshua and Harrison build simple cars, trucks, robots, trains and planes, which can be presented as gifts or birthday party favors. The toys are priced very reasonably, between $2 and $3 each.
The boys have a supply of multiple use Lego parts, bought by their father from a wholesaler and, when an order arrives, build as many toys as needed. They always keep one toy of each kind as a blueprint. The business inventory is very organized and is kept separately from their play Legos, which, understandingly, are a mess, according to Herz.
The idea of the business came when Joshua started playing with Lego blocks. Herz mentioned to them they could make some money building Lego toys. He also said this would help them be more creative, learn responsibility, understand how money works, be charitable, and improve their spatial, or geometric, reasoning.
At the beginning, the kids had no idea what dear old dad was talking about, but went along with the plan and a new Web site. Now they are like grown ups in several respects, considering they have that bank account with $75.
How did they earn that prodigious of a sum, at least for the under-10 crowd? By hard work, one would say. Their latest order was from Florida, for 23 cars. The Lego kids stayed up well into the night to fulfill it.
What now for all that money they’re making, one might ask?
“Some of the money goes to the government,” Joshua said. “And you have to pay the person that gives the Lego blocks.”
Added his father, “They give 10 percent of the profits to charity. The rest goes to the bank account to teach them about handling money.”
Joshua is the more mature of the two brothers, while Harrison seems to be the mischievous one.
Joshua likes to play with Legos “because if they break, we can build them again,” he said. Some of young artists’ creations even are posted on Lego’s official Web site.
Joshua also likes to paint Warhammer models, ride bicycles and listen to hard rock music. He practices karate and soccer. He hasn’t quite decided what he will do when he grows up, but probably would like to be a professional soccer player.
Maybe Harrison will become a scientist. “I like the chemistry experiments,” he said, “because I like to put yucky stuff in it.” He said.
Harrison also is a junior gymnast, a champion on the monkey bar, his father added. Rumor has it Harrison has been very popular with the ladies, too, including one young lady in particular.
Julie Herz, wife and mother, is the one who chauffeurs the guys to school and to all after-school activities. The boys said they enjoyed helping her bake brownies but were not very enthusiastic about helping to prepare dinner.
Meanwhile, back to the business of Legos, how long will it last? “Until we don’t want to do it anymore,” Joshua said.
Perhaps, after the entrepreneurial brothers grow out of playing with Lego blocks, they are going to possess enough business acumen to enroll in yet another adventure. One never knows.
For more information, visit http://home.earthlink.net/~hlh90/jhlego/.
Staying safe in an uncertain market
Is there really a way to protect us from an uncertain market? In this market environment, it makes sense to have a plan.
Looking at your individual situation, you should ask yourself how much you could afford to lose. Although it may be easy for you to answer “nothing,” try to be as realistic as possible in order to help put things in perspective.
Next, you may want to look at some possible additions to your portfolio to help reduce volatility and some of the pitfalls.
Consider the impact of adding bonds to your portfolio. When investing in bonds, many investors may have only one thing in mind, which is income. For instance, how much interest does a bond pay and how often?
However, these questions only address part of the scenario. Some other ways to analyze your bond portfolio is to watch your duration during uncertain times.
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For instance, in some circumstances you may want to try to keep durations to five years or less. This will be beneficial, allowing you to sell them and buy something different without having to hold them for 10 years or longer. However, depending on your individual situation, holding onto bonds for a longer time period may be more appropriate.
Consider buying higher-yielding bonds. This means you are buying bonds with lower credit ratings. You don’t need to speculate to get high-yielding bonds.
It can be difficult to choose the right type of bond, so it is best to work with a financial professional who can help determine which bonds may be appropriate for you. Please understand high yield bonds are not investment grade securities and may involve substantial risk. Therefore, high yield bonds are best purchased in a diversified portfolio.
Be open to alternatives to bonds as well. You may want to look at convertible bonds or Real Estate Investment Trusts, or REITs, as other options. Convertible bonds allow investors to convert the bonds to stock at a future date and price. Investors can get a lower monthly dividend in the short-term and convert to stock, trading ordinary income for capital gains in the future. These allow the investor to get paid a small dividend while waiting for the underlying stock to rise in value.
Real Estate Investment Trusts allow investors to invest in real estate. Please note Real Estate Investment Trusts can be subject to liquidity risk and are not always suitable for all investors. Real estate can be commercial, residential or industrial. Some Real Estate Investment Trusts are a combination of all types.
Real estate typically marches to its own beat; especially commercial and industrial properties. Commercial and industrial real estate is not affected a great deal by short-term moves in interest rates because the leases are typically longer.
However, residential Real Estate Investment Trusts fluctuate more frequently with the rise and fall of interest rates. Lowering interest rates make apartment dwellers look more favorably on buying their own home as interest rates fall. Typically, in residential Real Estate Investment Trusts, the tenants have much shorter lease terms compared to
commercial property.
Other portfolio options to consider include diversifying your portfolio further by adding some exposure to alternative sectors of the market such as natural resources, international securities, or emerging markets. Please keep in mind that international markets can be just as affected by market fluctuations and the political environment.
It is important when looking at a portfolio to help limit your downside risk when the markets become unstable. No one answer fixes the problem or helps protect from loss.
Further, running to money market accounts or certificates of deposit is not going to protect you either. Fixed income can be used in a diversified portfolio, but you may want to consider having at least part of your portfolio in the markets. Although you can try your best to plan for future market performance, no one can predict exactly what is going to happen.
Therefore, if you stay the course and establish your downside risk — so as not to scare yourself out of the market prematurely — and talk to a financial professional, you can begin to provide yourself will the right tools to prepare yourself for the unexpected.
John Schooler is president of WFP Securities. For more information, call (858) 677-0377 or visit www.wfpsecurities.com
