In our house toys are are being replaced by stocks as birthday gifts: Think Rich!
By Jay P - September 28, 2018
As a parent, we are constantly struggling to do better and be better for our children. We always want them to have better than we had as children. This often translates to the newest toys or the nicest clothes. However we often overlook the financial aspect about raising kids. Or kids reach adulthood and parents are taking out loans for their education of struggling to find the necessary funds to give them the leg up they need in this world.
I never grew up rich, but I have studied how many of them obtained their wealth. Most wealth is passed from generation to generation. Thats just the facts. Rich people operate differently. It’s partly because they aren’t living paycheck to paycheck struggling to make it like most of the rest of us. I may never be wealthy but I realized a long time ago there are things I can do to give my own kids a leg up to make it. Starting out your adulthood in unsurmountable debt is not the way to do it.
'Thinking Rich' involves more than just purchasing the latest and greatest or flashiest toys. In fact 'Thinking Rich' involves looking at everything as an investment. We often look at education as the greatest investment a parent can make for their kids. This is partially true but our views on education should go beyond the classroom. Financial education should be just as important an aspect.
How often do you hear that this rich person’s son/daughter inherited the family business. What you don’t hear is that they were groomed for the position from an early age. They were taught the business from the ground up. They worked and interned in the business on their summer breaks. That’s because their financial education was just as vital as the scholastic education they were receiving. Think about it, if you created a million dollar business wouldn’t you want it to succeed after you are gone? Who better than you children to continue that legacy?
I’m a simple man with not a lot of wealth. One of the ways my children are blessed is through a wealth of love from friends and family as I am sure most you guys children are. Now, how can we translate that into financial wealth? Well I think I have finally cracked the code, and here is how I’m going to do it.
As the old adage goes it takes a village to raise a child. Well what if we could truly leverage that village to give our children the necessary head start in life. As someone who is obsessed with giving my children a financial leg up in life, I’ve decided to discourage the purchase of toys as gifts for my kids and instead encourage family and friends to invest in their future.
In the past the only option investment we had for "extra money" was to put it into a savings account and accept a measly return. We now live in an age where financial freedom is at our fingertips. There are so many ways to financially prepare your kids to be smart about money.
Personally my parents took the opposite approach and avoided any discussions about money whatsoever. As far as I knew we were just barely surviving. Anything beyond the necessities was grandiose. This is not how the wealthy do things. The wealthy start preparing their children for success from the minute they are born.
As your child grows older you have the opportunity to teach them about finances and to learn from both your mistakes and success. One thing that we have to teach our kids is how to invest. Now I know that this may sound scary because we think of investing as gambling. I bought my fist stock not knowing what I was doing, I didn’t have a tutor, teacher or guide. I just decided to jump in the deep end. That was over 15 years ago. I have learned a lot along the way and hopefully I can use that information to teach my kids to not make the same mistake I did. Things are different now there is so much information and access at your fingertips that there is no reason not to invest.
Think about it. How much did your friends and family spend collectively on your child for their last birthday. Was it $200, $500 or even $1000. Now how many of those toys lasted the following year or even a month. $1000 invested in a fund that matches the stock market 25 years ago would be worth $8836.36 today. If you actually picked a great stock like Apple, that $1,000 would be worth $485,351.81. Now imagine if you did that for all of the birthdays for the next 25 years. That investment in Apple would be worth $1,830,337.06 today. Now think about that. Your child could be a millionaire by the time they are 25 years old. I know It sounds like a fairytale but I assure you these number are real.
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| Stockpile.com |
The question is how do you get started? With so many apps and platforms like Stash, Robinhood, Acorns there are a lot of different ways to invest without being a financial expert. That may sound crazy but a secret about the rich and the stock market is that if you stick to a long enough time line there is almost no way to lose money. With every great stock market crash, the market recovers in less than 10 years and comes back stronger and better. Not only that, generally speaking you can double your money every 7 years in the stock market.
To invest for our kid's future we are going to use the Stockpile website or app. On stockpile friends and family can gift stocks as gift cards to your children and directly invest in their future. We have already set up an account and have started investing in their future. Every year we will be sending out a list of stocks that friends and family can purchase as gift cards and send directly to the email associated with the account. Or they can buy the physical gift card in most grocery stores like Walmart, Target, Kroger etc. They can also chose to send an unassigned gift card and we will chose the stock to invest in. These gifts can be as low as $10 or as much as they want to give. I truly do love the freedom of investing with Stockpile. It provides an opportunity for parents like myself to give to our kids what we did not have.
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| Stockpile.com |
As our children grow, they will become more involved in the process of picking their own investments. As an investor I subscribe to investing in what you know and so I will encourage my kids to do the same. If they are huge Disney fans, we will suggest investing in Disney stock. If they become big on X-box video games then Microsoft may become an investment. If they are obsessed with McDonald’s Happy Meals then McDonalds too can become an investment. Obviously we will do our due diligence on those companies together but it will be a learning process for the both of us.
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| Stockpile.com |
To start off with we have chosen 5 stocks that we believe will be good investments over the next 25 years. Apple, Netflix, Disney, Amazon and Microsoft. These investments may change as our child’s interest changes. We will want these investments to reflect their interests because that will keep them engaged in the process long term.
We plan to make this an educational tool to teach our kids about finances. As a parent I view it as my responsibility to prepare my kids for the world. Financial success is a big part of being an adult that we often overlook. It is also beneficially to make mistakes early on in life.
Of course when you are dealing with small children they may not grasp the importance of getting stocks as gifts. Family and friends will not be scorned for giving them toys we just hope that they will see the benefit of adding to their financial future as well. As parents its important to understand that as we hone their mathematical and phonics skills, financial literacy is just as important.
This is an important step that any parent can make. You may not decide to go as extreme as discouraging gifts, but you can start your own investing account for your kids using stockpile. There are over 1000 stocks and ETFs to choose from on the Stockpile platform with a low $0.99 fee per trade. All of your favorites like Apple, Amazon, Google and Netflix are available for purchase. If you add to it steadily then you too can stockpile a nice nest egg to start your kid off right in the big wide world of adulthood.
Sign up for a Stockpile account today and get $5 to invest
Here is what my son's wishlist looks like
Here is what my son's wishlist looks like
