The holiday season is coming faster than you think. Before long, tinsel, carols, and Christmas trees will be going up around town. Before you start making a long shopping list of gifts for your kids, you might want to think about giving them something different year.
Financial gifts in the form of an investment that will continue to grow are great for kids. Giving an investment as a gift is a stellar idea for kids, and there are many benefits:
- There’s a long time in which that investment can grow; a $5,000 investment with a 4% annual interest rate will gain nearly $2,500 in interest over a 10-year period. Money invested today will be worth a lot more than a cash gift that goes straight into a savings account.
- Your kids will learn the real value of investing rather than instantly spending. An investment, even a small one, will show your kids how saving and investing can benefit them in the long run, and lead to more money down the road.
- You can make a contribution to their education fund or let them decide what they want to do with it. Put a time limit on how long it has to stay invested for, but give them a chance to learn about financial responsibility by letting them do what they want with it ultimately. They may regret using it to buy a car when they have student loans to pay, but it will be a lesson that sticks.
Great Investments as Gifts
1) Gold
Gold bullion is known as an asset that steadily appreciates over time. A safe haven for investors, its value is not nearly as volatile as a stock in a company, which depends on the greater economy as a whole, speculative investment, and the company’s performance and profitability.
When you buy gold as a gift, invest in a bullion gold coin or bar. A single ounce is a substantial investment, so make sure you have a plan for storage, or use allocated, off-site storage.
2) Silver Coins
Silver coins offer many of the same benefits as gold. Silver prices tend to rise faster than inflation and, a hard asset, it gives kids something they can look up the value of. Silver coins also come as collectibles that can be tailored to your kids’ interests. There are tons of unique silver coins out there for you to explore.
3) Stocks
Giving a company’s stock as a gift will be a great lesson in how investing and the stock market works. Reserve this for teens and smarter kids who will appreciate the financial lesson. It may also be wise to make this part of a larger savings account that sets them up for long-term investment success.
4) Bonds
A bond is likely the safest way to buy an interest-earning investment for your kids. A savings bond is close to cash, so your kids know exactly what it’s worth, but it’s locked away for years while it earns interest.
A savings bond is a great way to get kids to learn how interest works and keep them from spending it right away without putting rules around your gift.
All of the above investments are great gifts that will appreciate in value and teach your kids the value of investing.