An Investment is a Gift That Keeps on Giving

Giving an investment may not be seen as the most exciting Christmas gift but it's a great way to set a child up for their future

Jackie Beard, FCSI 12 December, 2012 | 3:02PM
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With the holiday season in full swing, you're probably thinking about what to get for the people on your Christmas list. One potential gift idea that's worth considering, even though it may not be foremost on your radar screen, is the gift of investment. Sure, a fund may not be as sexy as an iPad, but it can get the recipient started on a long-term investment programme that will pay off enormously down the road.

Eighteen years ago, my second niece was born, and not only did she receive a mass of toys and clothes, she stood to inherit all her big sister’s. Having decided to start investing for her big sister three years earlier, I chose to continue this trend since the new baby really didn’t need any more stuff. Each year I have added to both of their investment portfolios rather than buying gifts.

Consider Investment Trusts as a Gift

It can be hard to find funds that best suit small-sum investing. This is where investment trust savings schemes come into their own. For as little as £25 per month, or a £250 lump sum, the Silver-rated Foreign & Colonial Investment Trust (FRCL), for example, offers global equity exposure with a few extras thrown in—such as private equity—for an annual cost of just 0.57%.

In more recent years, as the girls’ awareness of the world has increased, I’ve been explaining these investments to them and what the funds represent. Names such as Vodafone (VOD), Next (NXT) and Marks & Spencer (MKS) now mean more to them than just mobile phones, party frocks and tights—they both understand that they own a part of those businesses. On her 18th birthday I passed the investments into the younger niece’s control. She may choose to sell up and fritter it away on shoes and clothes but I think, like her big sister, she’ll hold on for now as it’s sparked an interest in long-term investing and she’s seen the power of compounding.

Being a good financial role model for your family is one of the best gifts you can give them. As for the girls’ younger brother, he’s currently trying to decide the most spectacular way in which to blow the money when his time comes!

The original version of this article was published December 2009.

The author currently owns shares in the Foreign & Colonial Investment Trust.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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About Author

Jackie Beard, FCSI

Jackie Beard, FCSI  is Director of Manager Research Services, Morningstar EMEA