While I certainly acknowledge that young adults likely have a need for a car, computer, or money, is it really necessary for them to have a brand new car, the most expensive laptop, or a large sum of cash to spend on frivolous items? Why not cut back a little on the partying and give them the gift of stock? A gift of stock gives your graduate ownership in a company and a portion of its profits in the form of dividends. Companies like Mcdonald’s, Home Depot, Nike, Walt Disney, Coca-Cola, Microsoft, Hershey’s, General Electric, and ExxonMobil are just a few examples of companies that pay dividends. Some companies, like Procter & Gamble, have raised their dividend payment every year for the last 60 years!!
While there is never a guarantee when investing in stocks, wouldn’t it be a good idea to get your loved one started on a path to financial wealth and independence? And best of all, you can buy stock in many companies directly through their websites! Just click on the ‘Investor Relations’ link and call their 800 number to find out how to buy shares of their stock. This is very cost effective because you are bypassing the middle man and, therefore, are not paying a commission. Furthermore, most of these companies will allow you to automatically reinvest the dividends into more shares of the stock. The more shares you own, the more dividends you get! Maybe your graduate can even start investing his or her own money this way by automatically buying some shares each month. Some companies will let you invest this way (this is called dollar-cost averaging) for as little as $25 a month. Keep in mind that eventually he or she will need to diversify their investments to reduce the risk of owning just one stock.
I recommend pairing a gift of stock with a starter book on investing and/or personal finance. One of the books I have found valuable for young people is ‘The Millionaire Next Door’ by Thomas Stanley. This book teaches valuable lessons on how to live within your means. However, my all-time favorite starter book on investing is ‘The Early Investor: How Teens & Young Adults Can Become Wealthy’ by none other than me, Mike Zisa. (Yes, I’m self-promoting here!!) You can find these books on Amazon.com.
Congratulations to all our graduates on a job well done! Best of luck in college or your early career. And always remember this motto: buy assets, not liabilities!!
Author of ‘The Early Investor (How Teens & Young Adults Can Become Wealthy)’