March 01, 2017
March 01, 2017
The season of giving is now past, so you probably know if the presents you purchased were a hit or a miss. It's tough for parents, much less grandparents, to get it right every time. And let's face it, what children want isn't always what's best for them or something they need.
The practical thing is to forgo the latest fad gift or the soon-to-be-broken action figure and give something kids will appreciate when they're older: a good old savings bond or a contribution to a 529 college savings plan, maybe a beginner mutual fund. But those, too, have their drawbacks; you're investing for the children instead of teaching them something. It's nothing personal to them -- or won't be for a very long time. They have no buy-in, no say.
Collectibles used to be worth considering -- things like baseball cards or Beanie Babies. But over time, very few keep or build value. Often, they just end up adding to the clutter.
What I like better is the idea of investing for kids (when they're still small) and with them (when they're older) in a way that's fun and meaningful for years to come.
What I'm suggesting is that on the special occasions of your choice -- birthdays, holidays, graduations -- you think about what is important to that child at that stage of his or her life, and you invest in a specific stock that represents it.
So, for example, when a baby is born, or baptized or has her first birthday, instead of buying another stuffed animal that will land on some shelf or get lost under the bed, you buy stock instead. You buy Procter & Gamble because they make diapers. Or you buy Johnson & Johnson because your baby loves the lotion or baby shampoo. These are companies you're plowing your money into anyway; why not get a little something to show for it?
As your child gets older, you keep investing -- buying Hasbro, perhaps, because your little girl likes their games. Or maybe she's a fan of all things princess, so you buy stock in Disney.
Eventually, these kids will be old enough to have some input into those purchases. You can sit your son down and say, "Xbox or PlayStation?" If he likes them both, you can do a little research and decide which is the better investment -- Microsoft or Sony? Then track it year to year to determine if that was a good decision.
Worried those early stock choices might become irrelevant when the kids hit their teens? Maybe so. But if he likes football and ESPN, your son might want Disney stock -- it's ESPN's parent company. Your daughter will learn that the Cover Girl cosmetics she uses are owned by the same company that made her Pampers. And Johnson & Johnson? It also owns the Neutrogena products both kids could be using when the time comes to control their acne.
Some others to think about as the kids get older: Facebook, Target, Under Armour or Nike. These are companies that represent who kids are.
Even if some stocks don't pertain to the children's lives anymore, the portfolio you build together could almost serve as a memory book -- providing snapshots of certain segments of time. If you do it for 18 years, you'll have at least 18 different stock positions that represent something important to them.
You're giving them ownership, input and knowledge when it comes to investing.
And if you get other family members involved, not only will that portfolio grow more robust and diversified, so will the opportunities for learning. You can talk about dollar cost averaging, dividends and more.
I know what you're thinking: You don't want the children you love to be disappointed, and a stock portfolio could be a hard sell if they're asking for a bike or a dollhouse. It will be awfully hard to explain that these investments might one day help buy a real house.
But there are so many gifting opportunities in a year -- if you only choose one, it could make a difference.
And you can be sure this present won't be lost, tossed or forgotten.
Senior investment adviser Chris Hobart is the founder of the Hobart Financial Group, based in Charlotte, North Carolina. He is a Registered Financial Consultant, Investment Adviser Representative and licensed insurance agent.
Kim Franke-Folstad contributed to this article.
Investment advisory services offered through Global Financial Private Capital ("GFPC"), and Hobart Private Capital, LLC ("HPC"), each an SEC-Registered Investment Adviser. SEC registration does not imply a certain level of skill or training. Securities offered through GF Investment Services, LLC, Member FINRA/SIPC. ("GFIS"). Hobart Financial Group is not affiliated with GFPC or GFIS. One or more individuals at Hobart Financial Group are investment adviser representatives of GFPC and/or Hobart Private Capital and may receive compensation in exchange for soliciting investment advisory services provided by GFPC on behalf of Hobart Financial Group clients. One or more individuals at Hobart Financial Group are registered representatives of GFIS and may receive compensation in exchange for the purchase or sale of securities.
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