If you’re tired of wrapping up presents and giving them to your children only to find them carelessly discarded, unwanted and unused, before January 1, listen up. This Christmas, consider giving the kids in your life something different. Skip the gaming systems, virtual assistants and smart phones and give young people investments instead. It’s a meaningful and practical way to teach them about financial responsibility, and it’s a gift that will, hopefully, only increase in value in the future. Check out our list of the top four investments you can give to kids:
It might not be a mini-drone or pair of wireless headphones, but cryptocurrency is still pretty cool. It’s likely to impress any hoodie-wearing insouciant teenager who thinks his parents really don’t understand today’s modern ways. Digital currencies like Bitcoin, Ethereum and Litecoin are (for the most part) intangible “tokens” that can be bought, stored and exchanged anonymously. And while many cryptocurrencies are experiencing hard times, Forbes.com quotes “renowned venture capital investor Tim Draper” as predicting “the entire global economy will eventually pivot to cryptocurrencies, with Bitcoin leading the change.” Giving even just a fraction of a bitcoin or other digital currency to your teen not only ups your cool factor, but it can potentially pay off big time in 2022 (when above-mentioned expert Draper predicts that bitcoin prices will reach $250,000)!
Exchange-Traded Funds (ETFs)
Gifting an ETF can expose children to the stock exchange without a lot of extra hassle since ETFs enable investors to own stake in a lot of companies at once without making individual purchases. One transaction provides ownership in multiple (often times hundreds) of corporations and trades like traditional stock with fluctuating prices throughout the day. For instance, if your child is interested in Disney, you can find several ETFs holding Disney (DIS) stock, buy into any one of them and then track that ETF to teach your child about market supply and demand. ETFs are diversified like mutual funds, but they are cheaper, have fewer tax implications and are capable of being traded at any time, making them ideal for budding investors.
While a lot of kids aren’t thinking about college right now, they probably will be one day. They’ll eventually want to go to school to be a heart surgeon, a teacher, a business immigration lawyer or some other cool profession. Putting money into a 529 College Saving plan is a great way to save for your child’s educational needs without sacrificing a lot of money at one time. Small contributions can be made at any time and federal guidelines permit your investment to grow and be distributed tax-free when your child enters college. Local state laws might permit additional tax benefits, as well. Talking to your child about college and its associated costs long before he or she might be ready can establish a continued interest in and appreciation for the process when it’s actually time to put pen to paper and apply.
If you have little children, one of the best ways you can encourage early fiscal maturity is by taking them to open a savings account. This could be a great holiday excursion when coupled with a lunch out and a trip to the book store or library for relevant reference materials. Teaching a young person to use a savings accounts provides crucial lessons about basic mathematical functions and the importance of saving, as well as more complicated concepts like compounding interest and budgets. Physically giving a child cash, using it to pay for food or books and then putting the remainder of it in the bank can be the first step towards a healthy money relationship for him or her. (And if you do choose to stop by for a few books, be sure to look for One Cent, Two Cents, Old Cent, New Cent: All About Money and The Berenstain Bears’ Trouble with Money, two of our favorites.)
Disclaimer: This content does not necessarily represent the views of IWB.