Before you wait in the rain to buy your child that special gift like Harry Potter Lego or Twilight Bella Barbie, consider giving a financial-related gift instead. Money isn’t necessarily a boring gift. Gifts that teach the importance of sound money management and investment practices can provide valuable lessons that will serve your children for years to come.
Give a portfolio
Several shares of stock in a movie company or computer software could be a big hit with a teenager. Together you can follow the stocks performance in the paper and watch for news about the company.First, you have to open accounts in your name in trust for the child. Financial institutions and brokerage houses will not allow accounts solely in the name of a child until she reaches an age at which the institution deems she can deal legally for herself.Individual stocks may be better for educational purposes. Your children will receive annual reports and shareholder correspondence and begin to understand they are investing in businesses, not pieces of paper. This will lead to them learning more about the fundamentals of investment management. Some annual reports are actually lively, and if you invest in a local company, you can attend the annual meeting together.If you do buy individual stocks, try to pick companies that have dividend reinvestment programs so that additional shares can be acquired each time dividends are paid. This way you won’t have to worry about investing small amounts of money, and you will be amazed how, in 10 or 20 years, these small bits aggregate into large positions.Gifts that can grow over time
Several companies offer mutual funds especially geared to children. These funds invest in child-friendly companies and send the young investors educational materials that teach them about investing. They also typically accept lower minimum opening deposits and target long-term growth.
Term deposits, savings bonds and Registered Educational Savings Plans are also good gifts for a youngster. These gifts help them learn about money and shows that you believe in their future.
Books, videos and software
At bookstores and educational toy stores, you can find books, videos, board games and computer games that teach money management skills. For younger children, look for games that teach the advantages of saving part of their allowance. And don’t forget about the old classic, Monopoly, which teaches children how property appreciates in value. Older children might like a book about aspiring entrepreneurs, while college students, living on their own for the first time, might benefit from a book on budgeting.
The difference between these gifts and a Nintendo Wii is longevity. They will continue to run and “speak” to your children for years to come.