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Investing basics: give the gift of wealth

Emma Rapaport  |  20 Dec 2019Text size  Decrease  Increase  |  
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Every year I watch my nieces and nephews tear open mountains of Christmas presents after lunch. Last year, in our household it was all about PAW Patrol and Lego.

This year it’s about streaming services, tech and gaming, according to Roy Morgan’s survey of young Australians aged six to 13.

An envelope stuffed with share certificates is probably no kid’s idea of a cool present. But in hindsight, shares in Commonwealth Bank was the best gift I received from my parents. Not only have they provided a yearly dividend, but they have sparked a life-long interest in saving and investing.

My mother likes to remind me that she bought those shares in the early 2000s when CBA was trading at about $25. Today, CBA is worth $81 – a 224 per cent increase.

So, this year, ditch the Christmas shopping and get your loved ones something they’ll appreciate well beyond Boxing Day. Unlike plastic tat which will decrease in value, an investment is forever. While your friends and family might not thank you now, they’ll be grateful in the long run. Forget Let It Snow – make it rain this Christmas.

Here are some ideas to get you started:

Shares in a listed company

Minimum initial investment: $500 worth of shares (on online brokerage site CommSec) + brokerage of $10-$20

If you want to give someone a gift of money that’s also meaningful, a handful of shares in a blue-chip company or well-known brand can be a great way to show them you care. For example, instead of buying someone an Apple watch, you could gift them part-ownership of Apple Inc.

If you've never bought a stock before, let these quick reads What is a share where can I buy one? and How to buy shares on the ASX guide you. Similarly, you can give someone a gift card for US stocks via the company Stake, allowing them to choose their own shares.

If you need help selecting the perfect stock, Morningstar's global and Australian best stock ideas list ($) is a great source of insights and analysis. Our free stock screener is also a powerful tool to help you navigate more than 2000 listings.

Exchange-traded-funds

Minimum initial investment: $500 worth of units (on CommSec) + brokerage of $10-$20

Exchange-traded funds are a simple, low-cost way to invest. Instead of going all in on a single stock, ETFs let you buy a basket of stocks (or other assets) that track the performance of a market index. This is a great way to diversify your gift and make sure that over the long term it will have a good chance of success, making it the perfect entry point for a newbie investor.

ETFs provide easy access to a range of asset classes including shares, bonds, gold, and infrastructure. Like a share, ETFs are listed on the Australian Securities Exchange and can be bought via an online broker like CommSec or nabtrade.

If you're feeling overwhelmed, these articles – What is an ETF? and How to buy an ETF and How to find the best ETFs will walk you through the basics and help you select a top rated product. Morningstar fund analysts also publish independent ratings and analysis for ETFs ($), and free performance tables.

Listed investment company

Minimum initial investment: $500 worth of units (on CommSec) + brokerage of $10-$20

A first investment always comes with a choice. Am I going to select my own investments, or pay a professional to make decisions on my behalf, or both? A LIC, or listed-investment company, is giving someone access to an actively managed portfolio of assets. A portfolio manager is responsible for selecting and managing the company's investments. 

Like shares and ETFs, LICs are listed on the ASX and can be bought via your favourite online broker.

Need some more guidance? Check of this article Understanding your listed investment company. Morningstar fund analysts publish independent ratings and analysis for LICs ($), and free monthly reports.

Micro-investing apps

Minimum initial investment: starting from $5

Micro-investing smartphone apps have revolutionised investing by letting beginner investors bypass fund managers and make regular, small investments. An app like Raiz can be set up to take recurring investments or use spare change rounded up from daily purchases. For example, if you spend $3.50 on your morning coffee, Raiz will invest 50 cents into a portfolio of ETFs. Raiz joins a host of similar platforms including:

  • Pocket – micro-investing app that allows you to choose from seven different investment options
  • RateSetter – a peer-to-peer lending app that matches investors or lenders with borrowers for as little as $10
  • BrickX – fractional property investment app that providers a simple and low-cost way to access Australia's property market
  • Spaceship Voyager – automated small investments in a portfolio or international and Aussie stocks

Personal finance and investing 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 for the beginner and The Intelligent Investor for those with a little nous are finance essentials that help with mindset, practical tips, education and improving your financial habits.

For more book ideas, visit our Summer Reading List. Books like these can give a loved one the tools and knowledge they’ll carry for life.

Note: All investments carry risk. Please ensure to read the fine print when you’re buying on someone’s behalf.

is an editor for Morningstar.com.au

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