Certified financial planner Wes Moss provides personal finance advice and accessible investment strategies. His guest post appears here weekly.
With Christmas right around the corner many of us are braving traffic, crowds, stress and fatigue to find the perfect gift for our kids – the present they’ll remember for years to come. When you find that special something, you have an opportunity to give a second gift – a lesson on how to invest for their future, namely buy what you own.
It’s a simple but effective strategy. If you are a heavy and/or passionate user of a company’s product, you should consider investing in that company. If you regularly use Crest toothpaste, Oral B toothbrushes, Gillette shaving cream and Mac 3 razors, you are already a fan of Proctor & Gamble (which makes these products) and should consider owning P&G stock.
Similarly, watching your friends and neighbors swarm after particular products should prompt you to examine possible investments in either the manufacturer and/or the retailers that are benefiting from their popularity. A few days ago, I went around the office and asked anyone who has children what they are buying this Christmas – and where they are shopping. Here’s what I found: Lighting McQueen™ bicycles, Thomas™ the Train sets, Fisher-Price Sing-a-ma-jigs™, Toy Story ™ action figures, Barbie ™ & Ken® dolls and accessories. Target, Wal-Mart and Amazon seem to be getting most of my colleagues’ business (and my family as well). Based on my real-world survey, toy manufacturer Mattel, entertainment giant Disney, and those three retailers all might merit consideration as investments.
So, this Christmas give your son or daughter their dream gift as well as a piece of the company that made it. Does your 8-year-old son love Star Wars or Transformers? Get him the action figures he wants, and take a look at toy maker Hasbro. Buying an Xbox Kinect for your 14-year-old? Package it with a share of Microsoft stock.
You can buy single shares of individual companies through a DRIP account. You and your kids can then track the stock’s progress on Yahoo! finance. If buying individual companies seems daunting, you can still give the gift of investment knowledge by surprising your children with a few shares of an S&P 500 index, which gives them a stake in the largest companies across the entire U.S. economy. The Schwab S&P 500 Index Fund (SWPPX) is a great place to start.
- By Wes Moss, for the Atlanta Bargain Hunter blog