Investments: The gifts that can actually keep on giving


Jason Prowd  |  14 December 2018  |  7 min read

Key Points
  • Investments are a Christmas gift that can literally keep on giving.
  • There are plenty of creative ways to give someone money for Christmas.
  • Read the fine print when you’re buying on someone’s behalf.

Consumerism is out, minimalism is in. This year, ditch the Christmas shopping and get your loved ones something they’ll appreciate well beyond Boxing Day. While it may be nice to buy expensive presents, I’ll let you in on a secret: putting that money somewhere they can’t touch is a much better use of your gift budget.

Unlike physical items, which almost always decrease in value (just look at the Beanie Baby bubble), an investment is forever. While your kids might not thank you now, they’ll be grateful in the long run. Forget Let it Snow: make it rain for your loved ones this Christmas.

Individual shares

If you want to give someone a gift of money that’s also meaningful, a handful of shares in a favourite brand can be a great way to show them you care. For example, British beer company BrewDog periodically opens its Equity for Punks crowdfunding scheme to fans, who can become investors in return for a discount on their products.

Other consumer brands you could invest in include fashion and accessory brands, video game companies, and tech companies–it’s a great introduction to the stock market for kids (including big kids). Similarly, you can give someone a gift card for US stocks via the company Stake, allowing them to choose their own shares.

Or you can do it on your own (backed up by Morningstar’s research–provided you’re a subscriber–and stock screener, of course). Here’s how.

Exchange traded funds

An ETF, or exchange-traded fund, is essentially giving someone a tiny amount of many different companies. This is a great way to diversify your gift to make sure that over the long term it will have the best chance of success, making it the perfect entry point for a newbie investor. Likewise, a seasoned pro will appreciate the addition to their portfolio.

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Ready-made portfolios

Fair warning: you can’t do this one on the sly. But with a bit of preparation, a ready-made portfolio is a great way to kickstart a significant investment for your loved ones. Generally, they’ll need to be over 18 and you’ll need their consent and assistance to get the process started. But once you’ve skated through the admin stage, they’ll be on their way to easy, long-term investing. It’s more dear than an ETF, but great for those big-ticket gifts when you really want to set someone up for long-haul financial security. What this gift lacks in surprise, you’ll make up for in holiday cheer.

A savings account

Don’t worry—kids don’t have to miss out. Do them a favour and put aside some money in a savings account or term deposit. You can either open the account in their name or earmark savings in your own account to give them when they reach a certain age.

The earlier you start—and the more regularly you contribute—the better. Compound interest is the real gift here. Choose an option with a good interest rate and keep an eye out in case rates change or new products become available. The kids will be jingling all the way to the bank.

Property investment

No, I’m not talking about buying your loved one an investment property (although all their Christmases would come at once if you did). Property doesn’t just mean direct housing—you can reap the same benefits from investing in real estate investment trusts (REITs). REITs are made up of commercial properties like pubs, office towers and shopping centres. REITs that aren’t listed on the ASX do have management fees, but they can be a great way of getting on the property ladder without forking out a sizable deposit for a house. Listed REITs don’t have fees.

Investment books

If you prefer to give someone something tangible to go with your investment gift, a good personal finance book will never go astray. The Barefoot Investor, The Millionaire Next Door, and Your Money or Your Life are finance essentials that help with mindset, practical tips, education and improving your financial habits. Or, surprise them with a copy of 30-Minute Money Solutions, written by Morningstar’s own personal finance sensei Christine Benz. Books like this can give someone the tools and knowledge that they’ll carry for life. Think of it as teaching a man to fish.

Money doesn’t usually grow on trees. But this Christmas, it might just grow under one.

author

Jason Prowd leads Morningstar Next: ready-made investment portfolios.


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© Morningstar Investment Management Australian Limited (‘Morningstar’) and any related bodies corporate that are involved in the document’s creation. Whilst all reasonable care has been taken to ensure the accuracy of information provided, neither Morningstar nor its third-party providers accept responsibility for any inaccuracy or for investment decisions by any person on the basis of the information included. Past performance is not a reliable indicator of future performance. Morningstar does not guarantee the performance of any investment. Any general advice has been prepared without reference to your investment objectives, financial situation or needs. You should consider the advice in light of these matters and if applicable, the relevant disclosure document before making any decision to invest. Refer to our Financial Services Guide for more information.

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