Who Needs Toys and Clothes? Give a Child the Gift of an Investment

If you’re a parent of young kids, do your children have one designated play area where all their toys are stored, or do you have toys in several different places in the house?

I’m guessing it is the latter.

We have 3 kids ranging in age from 8 to 2, and they have toys all over the house.  They have a full play area, the excess toys are stored down stairs (or the entire play area would be chaos), and they have some toys in their rooms.  The funny thing is that we didn’t buy the vast majority of these toys; instead, they came from well meaning friends and relatives.

If you’re considering buying another toy or a cute outfit for a child in your life, why not consider a different present instead.  After all, kids grow tired of toys quickly, and they can be bought by parents for only a few bucks at garage sales or consignment stores.  Children grow so quickly, they sometimes are only able to wear an outfit that may have cost you $25 to $40 for only one season.

Instead, consider a trend that is taking the internet by storm–buying investments for children.

My Journey to Millions recently bought his niece investments for her birthday.  Of course, if the child is small, you may want to also get her a book or something fun, but investments are a gift that keeps on giving.  A child is the perfect recipient because she has so much time to let the investment grow.

Here are some places you might want to invest for the child:

1.  Their college fund.  Ask the parents if they already have a college fund set up.  If they do, offer to make a donation to the college fund for the child’s present.  You can also see if they are members of any other programs that help parents save for college such as Upromise.  You can link up your store loyalty cards to the account so a portion of any purchase you make goes in their college fund.

2.  Their Roth IRA.  Any teen who earns an income can open a Roth IRA.  Chances are, most teens don’t have one, but if you’re a parent of a teen, why not open one?  For Christmas or their birthdays, one of your gifts can be a contribution to their Roth IRA.  The savings potential is so impressive thanks to compound interest.  According to NBC News, if a child contributes $2,000 a year each year in a Roth IRA for the four years she is in high school, and then doesn’t add any more, she’ll end up with $456,000 in 50 years, assuming an 8% rate of return.  For a $8,000 investment, she gets $456,000!

3.  Stocks or bonds.  Children can hold them and cash them out to help pay for their college tuition or their first car or their wedding when they are older.  If you would prefer more control, you can put the investment in your own name and give the child the gift at the appropriate time, after it has grown considerably.

Giving a gift of an investment may initially underwhelm the recipient, but it is the gift that keeps giving.  Chances are, as the child grows older, she will be very glad you gave the gift that you did.

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Melissa works from home as a freelance writer, virtual assistant and blogger. Her blog, Mom's Plans, reflects her desire to plan life one step at a time while caring for and homeschooling her children (ages 9, 5 and 3) as well as paying down debt and saving for a house.
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Comments

  1. Great thought “Give a Child the Gift of an Investment”, I am agree with you. Just few year ago, I had made same planned but I didn’t execute. $456,000 in 50 years that’s really hugs capital for future.

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