14 December 2023: Gifting your loved ones with traditional gifts this festive season is great, but have you ever thought of gifting shares, ETFs, ETNs or even a Unit Trust as an investment for the future and a gift that has the ability to keep on giving?
This can be an even more thoughtful way to secure your children’s and loved one’s financial future. This is a gift that can help kick start their financial and money management journey and help instill sound financial decisions that will help them in the future.
Sebastian Pillay, Head of Share Investing at FNB says, “While traditional gifts may provide immediate joy and satisfaction, gifting a loved one an investment like shares, offers a long-lasting and potentially rewarding opportunity, where this gift is an asset that can grow over time. This gift has the potential to improve the well-being of those most special to you and especially an opportunity for kids to learn from an early age about the wonders of investing.”
Pillay unpacks the benefits of gifting your loved one their first start in investing:
Financial education: Gifting shares provide an excellent opportunity for financial education. It allows recipients to learn about investing, stock markets, and the importance of long-term financial planning. By owning shares, they become a stakeholder in a company which can foster a sense of financial responsibility and understanding of their investment.
Wealth accumulation: We all know the saying; “Rome was not built in a day” and the same goes for wealth creation. It takes time and consistency which is a valuable lesson that can be learned by investing. Shares have the potential to appreciate over time, leading to wealth accumulation. Unlike material gifts that may lose value or depreciate, shares can grow and provide a substantial financial foundation for the future.
Ownership and Decision-Making: Owning shares instills a level of decision making. Like what to do with your dividends, do I spend or reinvest? How long do I stay invested in one company etc. This helps you make informed decisions and understand the consequences of your actions.
Compound growth: One of the key advantages of gifting shares is the power of compound growth. Over the long term, reinvested dividends or interest and the appreciation of stock prices can result in significant returns. Starting an investment portfolio early in life can harness the full potential of compound growth, providing a financial cushion for the future.
Flexible and transferable: Shares are a flexible and transferable asset. They can be easily gifted, sold, or passed down to future generations. This flexibility allows for strategic financial planning, ensuring that the investment aligns with the recipient’s financial goals and objectives or the option to pass down to their loved ones at some point if they choose to gift others.
Promoting financial responsibility: Gifting shares encourages financial responsibility and a long-term perspective on money management. Recipients learn the value of patience, strategic decision-making, and the importance of maintaining a diversified investment portfolio.
“Gifting shares or any investment is meaningful and provides a forward-thinking view of investing in the financial well-being of your children or loved ones. It goes beyond the joy of receiving a gift and offers a lasting asset that can grow and provide financial security for years to come. By combining the benefits of financial education, wealth accumulation, and ownership, gifting shares sets the stage for a brighter and more secure financial future,” concludes Pillay.
Are Ess Tee
Simon Walker: Director General – Institute of Directors: As the public face of the Institute of Directors, and the most senior representative of the membership, Simon Walker engages with senior figures from across government, politics and Whitehall, and debates regularly in the media.Previously Walker has worked in senior communications roles at Reuters and for HM the Queen. Before being appointed Director General, Walker served as Chief Executive of the BVCA, an organisation that represents British private equity and venture capital.In 2015, GQ magazine listed Walker among the 100 best connected men in the country.