It’s the time of the year of season’s greetings and gift-giving. For parents, this is a time when you spend on presents that makes your child happy (sometimes only momentarily). Instead of spending on gifts that will be discarded and forgotten when your child grows up, how about spending on gifts that will set your child up for life?
Here are 5 Christmas gifts to kickstart your child’s financial future.
To kickstart your child’s interest in investing, you can start him or her with a Christmas gift of “ownership” of their favourite companies through stocks. Disney (NYSE: DIS) is an all-time favourite with memorable characters for children and strong fundamentals to satisfy the discerning stock investor parent. Likewise, popular brands such as McDonald’s (NYSE: MCD), Coca Cola (NYSE: KO) and Apple (NASDAQ: AAPL) are companies that will not just appeal to children in terms of brand familiarity but also to parents who want gift their children a blue-chip stock that would appreciate and grow with them.
To make this gift more tangible, you can design and print out your “stock certificates” for your child to unwrap. However, the true gift is in educating your child to understand stock investing and teaching them a valuable skill that will last them a lifetime.
Note: Many of the brands that would be familiar to children are international brands. To purchase these stocks, you will need to have a brokerage account with access to overseas stock markets. Additionally, unless your child is of age and can open his or her own account, you will most likely have to purchase the stocks on their behalf and gift them the shares later in life.
With DBS launching its digital exchange and starting trading of cryptocurrencies, Bitcoin has gained a lot more mainstream attention. If you believe that digital currencies are the way of the future, you can gift your child a Bitcoin.
With 1 Bitcoin costing about S$30,000, this can be one expensive gift. Thankfully, you can purchase fractional value of Bitcoin: 0.001 Bitcoin will cost about $300 and 0.0001 Bitcoin around $30. You can also consider the second most popular cryptocurrency by market capitalization: Ethereum. 1 Ether will cost you about S$850 and 0.1 Ether costs about $85.
To make this more fun for a child, you can also buy a collectible plastic “bitcoin” coin to wrap as a gift. Do note that to store your cryptocurrencies for the long term, you will need a digital wallet instead of leaving it in the custody of the exchange.
#3 CPF Top-Ups
For those too young to understand and those old enough to start learning about one of the fundamental government policies that every Singaporean should know, CPF top-ups can be an unconventional gift and learning tool.
Topping up your child’s CPF account can be a powerful way to illustrate the power of compound interest. In fact, just S$64,350 can make your child a millionaire by the time they retire at 65. You can find out more from this article – How To Make Babies Millionaires In Singapore (Using CPF!).
If your child is old enough to understand, this is a great teaching opportunity to engage them about finances and CPF. If your child is just a babe, the gift has even more time to compound and multiply before your child is aware and old enough to learn. However, this gift may disappoint children who are at the age where they care about receiving a present but are too young to understand an abstract concept like compound interest and CPF (which even can even baffle some adults).
#4 Child Development Account
For the really young, topping up their Child Development Account (CDA) may make more sense than giving them a gift. In fact, you may even want to get well-meaning grandparents and relatives to chip in to this gift or bank in the “angpows” they receive during their first few Christmases.
When you top up your child’s CDA, not only does your child receive a present from you (the parents), family and friends, but they also receive a present from the government with the government’s dollar-for-dollar matching. What’s there not to love about this present?
#5 Gold Coin
Finally, for those who really want to gift a physical present and still kickstart your child’s financial future, you can consider giving them a gold coin.
Gold has long been regarded as a safe haven asset and a store of value. During the market volatility of the COVID-19 pandemic, gold shone even brighter and reached a new peak of US$2,067.15 per ounce. Currently, the indicative price for a 1/20 oz (about 1.4 g) gold bullion coin is S$171 while a 1 g gold bar is about S$108.
Do note that only Investment Precious Metal (IPM) grade gold coins will hold up their value as gold. Some collectible “gold” coins may not actually contain significant gold purity to be traded as gold. Thus, make sure that you are buying a gold coin with the right gold purity.