NEW YORK (MainStreet) -- Let's face it, your teenage children don't need to upgrade their iPhone this holiday season -- in a year it will be outdated. The same goes for iPads, Androids and pretty much everything else tech-related. Instead, how about giving your children something that will last? How about a gift that can be truly life changing and intellectually stimulating? The answer might be simpler than you think.
Get them investing.
This holiday season, avoid the normal gifts and give your children money to start their own stock portfolio.
This may not have the "OMG' effect" that a new iPhone does, but it will create value that lasts longer than any other gift. Your children are definitely not thinking about their retirement at this age, and they likely won't until their late 20s or 30s. But starting to save for retirement in your 20s is beneficial, but if you start in your teens, the effect can be exponentially beneficial.
Consider starting a portfolio with $3,000 with plans to retire at age 60. If we start this portfolio at age 25, add an extra $20 every month, and grow this portfolio at 8% annually, this portfolio will grow to $85,712 by retirement. Now consider starting this portfolio at age 15. You will now retire with $188,522.
This sounds great, but unfortunately there aren't many 15-year-olds with the foresight to save for retirement. Jump-starting this process for them will lead to a significantly better life, and they will start trading stocks long before their friends have even heard of the stock market.
I started investing at the age of 14. I was nervous and fearful at first, but eventually I took the chance. It started as something I feared. Then it became a hobby. Then a passion. Then my career choice. The benefits I received from starting a portfolio at 14 extended well beyond the money I have made. The advantage I had over my peers throughout school was immeasurable. Economics classes were teaching me things I had already taught myself years ago, and finance classes were incredibly simplistic.
This year, avoid the normal gifts that lose their value in a few years. Open your children a brokerage account, buy them a copy of Jim Cramer's Real Money (the book I used to get started) and explain the tremendous effects of investing at a young age. The idea of making thousands of dollars is likely enough to start them reading, learning, saving and investing. This gift will not only be exciting and rewarding, but the effects will last a lifetime.
--Written by Alex Pottmeyer for MainStreet