What Your Grandchildren REALLY Want, According to Millennials

There’s no better feeling than finding a bunched-up $20 bill in a pair of old jeans. It’s as if you gifted your future self free money.

Thanks, past self!

Now imagine folding up a $20 bill… forgetting about it… and pulling out $443.25 a decade later…

Here’s the story of my 2,116% gain.

My great-grandparents had a tradition: Instead of gifting material things or even cutting checks, they bought their great-grandchildren stock.

You see, my great-grandfather, a Russian immigrant, knew the power of hard work. He knew what it meant to build wealth from nothing. And he laid a strong financial foundation for our family.

As I kid, I always had my nose in a book. So naturally, my great-grandparents bought me stock in a small but growing online bookstore. One that turned into a billion-dollar e-commerce machine: Amazon (Nasdaq: AMZN).

(My cousin, the tech fanatic, received stock in another promising digital company turned iGiant.)

As an adult, I’m grateful that I received this present over a gift card to the mall.

My great-grandparents may not have known what their $70.65 investment would turn into (surely not $1,566!), but they knew it would grow over time into something much more valuable.

This legacy taught me the importance of making financially sound, forward-looking decisions.

I was an investor before I even knew how to invest.

If you want to leave the same legacy for your grandchildren or family members – and provide them with a solid foundation on which to grow their wealth – here’s a good place to start.

Custodial Accounts

The Uniform Gift to Minors Act (UGMA) and Uniform Transfer to Minors Act (UTMA) allow minors to own assets under a custodian’s control. These accounts can be opened through banks or brokerages by an adult who will maintain the investment on behalf of the minor.

These accounts are easy to set up and do not require the assistance of a lawyer. Unlike in a trust – where you can specify what the funds are used for – the minor gains complete control over the funds upon reaching the age of distribution (varies by state).

Any income from the account belongs to the minor. However, the custodian is responsible for filing an income tax return on the minor’s behalf. In some cases, a custodian can claim the income from the UGMA or UTMA account. But always consult a tax professional about the best filing options.

A substantial custodial account balance could also affect a minor’s eligibility for financial aid, so you’ll want to do your due diligence before signing on the dotted line.

Getting Started

If you already have an investment account with a broker or financial advisor, you’ll likely want to open your custodial account through them.

If not, you’ll want to start by looking online for a broker with no fees and no minimum initial deposit.

You’ll also want to consider what other resources are offered, such as educational platforms, mobile tracking and reliable customer service. Remember, your grandchild (or whoever) will be inheriting the broker as well as the investment.

Many brokers will offer incentives, so you’ll want to shop around to find the most bang for your buck.

The Perfect Pick

Amazon was the perfect match for my interests, but not every child is an avid reader. Try to choose a company or sector in which your grandchild will have a lifelong interest.

And beyond that, look for companies with long-term growth potential. This is likely a “set it and forget it” investment, so you’ll want a company with a lot of promise.

If you don’t know where to start, consider a Perpetual Dividend Raiser. Using a dividend reinvestment strategy, you can increase your holding by purchasing additional shares with the dividends; it’s truly the gift that keeps on giving.

So ditch the gift cards and the latest tech. If you really want to give your grandchildren something to cherish when they’re older, jump-start their wealth building with the gift of the free market.

Good investing,

Rebecca