We have been discussing over the last few months what to give our grandchildren for birthday or Christmas presents. We decided to go with the long-term perspective of giving stocks.
Most of the presents we have given to our children over the years ended up broken, in the trash or lost. And really, think about it, will your grandchildren remember the ugly Christmas sweater you got them after they have grown up? Probably not!
So we decided that with our grandchildren we wanted to do something different and help them develop a longer term perspective on life by giving them stock or mutual funds for presents. This is something that would stimulate conversation not only with our grandchildren but also between us and our children and perhaps between the siblings.
We also hope this will help our grandchildren to see a better way to handle finances than living paycheck to paycheck.
This also is one way of doing the following verse:
- Proverbs 13:22a A good man leaveth an inheritance to his children’s children….
This giving of stock can open up conversations in your family and especially between you and your grandchildren as they grow up. For instance:
- Why to save money
- How to save money (automatic deductions from checking accounts)
- Not to spend all you take in
- How to grow your net worth over time
- How saving this way can provide for your family and your retirement.
- What happens if you live paycheck to paycheck?
Then when they reach adulthood, they will still have much of your presents left.
To do this their parents need to open a guardianship account with an online stock broker like TD Ameritrade or Charles Schwab. Usually these accounts can be opened with no funds deposited in them. And they usually do not require a management fee from what I have been told. Then when the child comes of age, 18 or 21 depending on your state, the account will become theirs.
Then we would buy the stock in our account and transfer it to the child on or before their birthday. Most charge no fee for the transfer.
Doing this may stimulate your children to add to the guardianship accounts for their children also.
They no longer issue stock certificates for stock (I was disappointed at that information), so you will need to download a blank fake form online and fill it out yourself to have something to give them on their birthday. Then they could keep those in a notebook.
Our plan is to buy all the stock for all the grandchildren on the same day once a year, usually in the fall when stocks are cheap. Also buy some of the same stock for ourselves so we can see how their accounts are doing since we will not be the guardians of the accounts. This way they all get the same stock bought at the same time. No partiality.
There is no rule on how much money you should spend. It is the idea of the long term perspective on life, and how to treat money that is important rather than the amount. So you could do $50.00/year or much more. So for five grandchildren and us that would be $300.00/year. Not too bad.
This is just one more way in which we change ourselves and set a pattern for the generations that follow us to being producers instead of consumers — owning instead of buying. Learning to live on less than our income. Then taking part of the income, investing it and having it produce more.
This is all part of The Prosperous Life.
Have a great New Year. Let me know how it goes for you in this adventure.
Poverty vs Wealth Available on Amazon