Give the gift of stock

From now until the end of the year, you have an opportunity to help reduce estate taxes and provide your loved ones with a more substantial legacy – all through the gift of stocks.

The idea of giving stocks to children and teens this holiday season is an attractive option for some parents and grandparents. Gifting stock is an enduring way to pass on what we have learned about managing and preserving wealth to the next generation.  It can teach them a lesson about the markets as well as encouraging children to save while cultivating a responsible approach toward managing money.  You may even want to consider using some of the gains to teach them the importance of charitable giving.

When gifting an investment, take the time to explain basic investment types such as cash instruments, stocks and bonds. Make investing interesting by engaging in conversations about companies that provide popular children’s products such as toys or clothing.  And be sure to explain the powerful concept of compound interest, so children can see in numbers the difference between starting to save early and leaving it until later. 

A great way my children were able to understand the importance of finances at an early age was through books that incorporated financial concepts into an interesting storyline. Not only did “The Richest Man in Babylon” and “The Ultimate Gift” offer valuable financial advice, it also addressed important life lessons.

“The Richest Man in Babylon” by George S. Calson tells the story of two penniless friends who seek the knowledge of wealth from their old classmate, the richest man in Babylon. It teaches the lessons of work, savings, investment, risk, retirement savings, annuities and education.

“The Ultimate Gift” by Jim Stovall tells the story of a billionaire that leaves his family a number of profitable businesses after his death, but forbids them to run them.  He believed that raising his family by giving them everything they wanted now left them entitled and incapable of work.  However despite his great nephew’s serious attitude problems and a sense of entitlement, the old man sends him on a quest through a series of prerecorded videos for the ultimate reward.  If he completes the quest in a year, he will inherit one billion dollars. The value of work, money, friends, education, strife, family, laughter, dreams, gratitude and more are explored as he struggles through the quest.

My son and daughter read these books at an early age and have reread them over the years.  My sincerest hope is that if I ever have grandchildren that my children will give them these two books of knowledge, plus a few shares of a good stock.

Categories: Finance