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Money Talk: Holiday Gifting

These holiday gifts for kids will both teach them about money and have a lasting impact on their lives

By Rodney A. Brooks

First of all, let me say, I’m not a grinch. So, I’m not suggesting that you don’t buy your young children the toys and gifts that they ask for. But the holidays are the perfect time to buy gifts for your children (or grandchildren) of any age that will teach them lessons about money and investing and provide them a solid foundation for their financial futures.

Let’s start with a little lesson on the stock market. The last two months have been good for stocks, but it’s not hard to remember when stocks fell off a cliff earlier this year. Still, the S&P 500 is down 15 percent this year.

But over the last 20 years the annualized rate of return for stocks is nearly 10 percent. Over the last 10 years the annual rate of return for stocks has been 16.4 percent.

So, think about how a simple gift of $100 invested in the market would grow as your children or grandchildren grow. Let’s do an example.


Invest $100 with a return of 6% to 10% a year and your return will be $2,330 in 20 years. But if you add $25 a month to that initial $100 investment, you will have $14,194. That gives tinuing to contribute regularly.

Here are some great financial gifts for kids.

Mutual Funds

Mutual funds will let you invest as little as $100 if you agree to automatic contributions. Mutual funds are safer than stocks because each fund invests in hundreds of different stocks. That makes them less risky. Some of the larger mutual fund companies are Fidelity Investments, Vanguard, American Funds and Franklin Templeton Investments.



Most financial advisors recommend that new investors start out with mutual fund. But parents for years have gifted children a single share of stock. That way they can watch it grow or buy more as they age. Boomers will remember that Baby Bell stocks were chosen by parents often. But sometimes toy companies, retailers or even automakers.

Let’s say you buy one share of Disney. Right now, the stock is selling for under $100 as the company is undergoing some management turmoil. Besides the theme parks, Disney is in the movie business and the streaming business. The Motley Fool, an investing website, has picked Disney as one of the 10 best stocks for investors right now.

Footnote: If you had invested $1,000 in Disney 10 years ago you would have doubled your money.

I am not recommending Disney stock; I’m just using it as an example. If you had invested $1,000 in Amazon 10 years ago you would have $7,653 today.

529 Plan


I’ve written about them several times. A 529 can be used it to pay for college or for private school tuition. Just about every state has a plan available. Like mutual funds, you can open a plan with as little as $100.

You can keep control of the money as it grows and turn it over to the child when he or she turns 18 to help with college tuition. They (or you) can also use it to pay private or trade school tuition.

You can also set up the account so friends and family can contribute.

Savings bonds

Savings bonds have long been a favorite gift of parents to their kids. Series EE or I savings bonds will earn interest for up to 30 years. Right now, the rate for Series I is 6.89%. To check current rates, go to


And for the big kids

Finally, I want to suggest a gift for your big kids, whether they be Gen Z or Millennials. Buy them a one-time sit down with a financial planner. You can find one locally that may agree to a minimal rate. Prices can vary.

You can contact one of the mutual funds which also provide the service. Cost could be as little as $300 or even less. It could also be considerably more, but I’m sure you can keep the cost low with the right person. If you already have a financial advisor, they might do it for free.

It could help you adult children towards a more solid financial future. The financial advisor may tell how to better save or if they are putting enough money in their 401(k), for example.

Your grown children may not listen, but you might also be helping them achieve a solid financial future and help close the racial wealth gap.

Rodney A. Brooks is a Texas Metro News Columnist and Senior Fellow at Prosperity Now. The author of Fixing the Racial Wealth Gap: Racism and discrimination put us here, but this is how we can save future generations, he has written for USA TODAY, The Washington Post and National Geographic.

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