Gifting to the Children We Love – Part V

The subject of investing encompasses a host of disciplines, skills, and experiences that no one individual can hope to master in a short course. The key to developing future mastery over a period of two or three decades is to afford a young person assistance in identifying areas of personal interest, and relating those to local or global investment opportunities in a manner that will illuminate the pathway to a desired goal. It is best to start with simple investments and build from there.

A monetary gift can provide seed capital for a child’s personal investment account. Combining this with a financial learning journey on how to invest can form the basis for a long-term project as part of helping the whole family build wealth together. Parents and siblings can be inspired to participate themselves when they see positive results from the efforts of a young family member. Thus, one way to help adult family members is to teach them through the education of their children and siblings.


  • Precious Metals: The purchase of gold and silver coins is an ideal initial long-term investment. Investing in coins can involve a child in understanding currency and inspire him or her to learn about the history of currency. Graphing the price of gold and silver against U.S. dollars, other commodities (such as oil), and other currencies can be a great lesson in international finance and the effect of monetary policy on the value of the national currency. For this purpose, is vital to introduce children to various sources of reliable information and commentary. Financial websites such as Yahoo Finance,, The Moneychanger, and Bloomberg (see links at the Solari blog); segments of the Solari Report; recommended reading; and relevant movies can all contribute to to their learning. As time goes on, the youngster can begin to distinguish between trustworthy educators and journalists versus those who merely repeat a timeworn mantra of questionable value.
  • CD at a Local Credit Union, Coop, or Bank: When a child’s investment is made in a financial institution CD, an adult sponsor may arrange for a representative of the institution to give a presentation describing where deposited money has historically been invested, the forms in which the institution’s investments have been made, and what such investments have helped accomplish in the community. Then the sponsor can engage the child in a field trip in the community to see whether the claims made by the financial institution are valid. As a lesson on the value of impacting our world by voting with our money through making wise investment choices, the sponsor, or other assisting adults, may support the child in doing further research on what centralized financial institutions do differently from other types of financial organizations. (For example, draining the community of the value of local deposits; taking market positions and implementing credit policies that destroy small businesses and family financial well-being; engineering government programs such as food stamps to their benefit.) The child might be encouraged to imagine a different world in which financial institutions were conducted in a manner that builds wealth within the child’s community. Alternatively, one might arrange with the local financial institution to make and service loans that a group of kids guarantee with their CDs as collateral. That way, over time, the kids can learn to make loans themselves and see what happens when there is a default.
  • Collectibles: Collectibles may present an opportunity to the extent that the donor or recipient has, or would like to develop, an expertise in a specific area, e.g., stamps, comic books, baseball cards, and so forth.
  • Solari Circle: Organizing a Solari Circle for Kids offers a means to teach financial concepts in a group setting, especially useful for home-schooled children or in a school-sponsored club setting led by an adult volunteer. Here are some ideas of what a Solari Circle for Kids might accomplish with the assistance of one or more strong adult facilitators:
  • A Group “Hand”: Essentially, a Solari Circle agrees to an amount that each member will put into the pot each time the members gather. So, if there are five children in the Circle, and they agree to put in $20 each month, that is $100 each month with which they can:
    • a. arrange for one child to take the pot and determine what to do with that month’s money. Ideally, this helps children learn to save.
    • b. sign up for The Moneychanger‘s monthly gold and silver coin acquisition program (as long as the group is not based in Tennessee, where tax laws make such a program uneconomic for residents). Each month, one child takes the coins.
    • c. build up an investment pool that the group uses to make local loans and investments.
  • Simulated Portfolio: An exciting simulation experience can be had through the creation and maintenance of a phantom investment portfolio on Yahoo Finance or by using similar software. This enables children to watch companies’ stock performance. For example, they can choose companies that they are familiar with or that produce product the children use; various local businesses; businesses that provide services or products that dovetail with the children’s hobbies, interests, or career pursuits; companies based in other continents that the children are studying. Activities could include comparing the performance of U.S. companies to that of companies based in other countries, including observing what happens to share prices when major news developments occur. This exercise helps children understand the dynamic relationships in the economy—between governments and businesses, between institutions located in different regions on the planet, and between consumer products and the investment community. It can also make them aware of the competition for resources that leads to economic warfare and war, as well as the tensions that exist between investor return and corporate and governmental responsibility.
  • Participation in Local Political Process: Understanding the local political process and how it relates to the creation of rules that affect the local economy is one aspect of understanding the investment process, not only in the United States but globally as well. Participating in a local campaign, attending local city council, zoning board, and similar public meetings, and reviewing public budgets and legislative decisions can be enormously instructive for understanding why and how decisions that affect everyone in the community are made.
  • Stock: The best stock to buy is one in an enterprise of particular interest to the child. For example, for a child who loves football, it might be stock in the Green Bay Packers (which is a publicly traded security). For a child who is into computers, it could be shares in Apple. For a child interested in clean technology, it could be a fund that specializes in investing in stocks of companies that use new technology to help us reduce our environmental footprint. The idea is to open a discount brokerage account (such as at Charles Schwab) in the child’s name and help the child select and purchase stock. The donor or another qualified adult can teach the child concepts of financial and corporate governance and social responsibility, using publicly available quotes and the company’s annual report and proxy. In the process, the child could learn about financial reporting and how to research publicly available information. Ideally, it would be most instructive for the child to attend the company’s annual meeting, vote the proxy, see how the board and management function in relationship to shareholders, and find out what issues are addressed at an annual governance meeting.

Read the full article here.