As gifts this year, teach kids perspective, sharing
BY TERRY SAVAGE SUN-TIMES COLUMNIST Jul 14, 2006
Updated: May 3, 2013 12:14PM
Originally published: Jan. 6, 2002
Every year at this time I like to write about spending money on holiday gifts that can grow in importance for your child, and teach some money lessons, as well. And I’m happy to pass along some investment ideas that can boost a college fund, as well as create an interest in investing. But this year there are some other lessons that are appropriate gifts for the holiday season.
The first is the gift of perspective. This year even the youngest child can appreciate how much he or she has been given in the sense of sharing a family’s love. Take a moment out of your shopping spree to have a little discussion and put that in perspective.
The second is the gift of sharing. What better year to find a charity that will distribute toys or clothes--not only to children in Afghanistan, but to those within the borders of our own city. Call any of the radio or television stations in town to find out where these items are being collected.
The third is the gift of giving. We denominate so much in terms of dollars and cents that this is a really good time to show that it’s “the thought that counts.” So help your child make a holiday card or a coupon book, drawn with care and full of promises to “be good” or take out the trash, or walk the dog, or make the bed every day. Even a young child knows the value of a promise.
Gifts that keep giving and growing
And now back to the subject of money. We’re busy tracking holiday sales as a barometer of the health of the economy. But some gifts transcend the cash register--and last longer. So here are some of my choices for gifts that keep giving and growing.
?183-142? Open a mutual fund account in the Stein Roe Young Investors Fund (800-388-2550 or www.steinroe.com ). You can start an account for as little as $100 and add $50 at any time.
The fund is dedicated to helping kids become investors. They’ll receive a monthly newsletter with games, quizzes and articles geared to children, so they’ll be aware that they own shares in companies ranging from Walgreens to AOL. This large-company growth fund has taken its share of losses this year--down about 20 percent. (OK, kids have to learn that stocks go down as well as up, in the short run.) But the fund has an excellent track record since its start in 1994, and this is, indeed, a long-term investment.
Start investing in individual stocks. Most brokerage firms have minimum investment amounts and charge substantial commissions even for small purchases. But there are two Web sites designed just for the purpose of encouraging small investors. Start with www.BuyandHold.com, where you can sign up for a $6.99 monthly charge that allows you to invest at least $20 in each of two stocks. Each month you can add more--either to the same stock position, or choosing different companies. You can track your purchases online, and there is even a log-in option for children that allows them to view their portfolio every day, although not to trade unless the parent or grandparent inserts a PIN.
Similarly, www.netstock.com allows any $20 purchase of shares for a $4 commission, or unlimited monthly purchases for $12. Until Christmas, netstock will add $25 in buying power to any new account that is opened. As with BuyandHold, you cannot specify a limit price for your purchase. All orders are batched together, and purchases are made twice a day. And in each case, if you want to actually collect the certificates--something that is hardly done any more--you’ll pay an additional $25 fee to have your shares registered and sent to you.
The gift of education
Start a Section 529 college savings plan. (The Illinois plan is at www.brightstartsavings.com.) You can invest in any state’s plan, and use the money for any child to attend college in any state. All the gains are withdrawn completely tax-free if the money is used to pay for college expenses. These plans have almost no impact on financial aid, unlike Gifts to Minors accounts that weigh heavily against families who apply for aid. Most plans let you start with $50 and invest regularly. The Bright Start minimum is $25, with additional $15 investments at any time.
It’s best for investors to learn the lessons of investing while they’re young. Then they won’t be so surprised when they have more at risk by the time the next generation’s bear market comes along. And that’s The Savage Truth.
Terry Savage is a registered investment adviser and is on the board of directors of McDonald’s Corp. and Pennzoil-Quaker State Co. Send questions via e-mail to email@example.com. She appears weekly on WMAQ-Channel 5’s 4:30 p.m. newscast.