Many grandparents are quick to send a check to their grandchildren as a present in hopes that they will use it responsibly, but recently I heard from two grandparents (and Early Bird readers) Barbara and Bob Baute and they have a next level idea. They have a combined total of nine grandchildren, with ages ranging from 12 to 20 years old.
Their idea was plain and simple, give their grandchildren directions to follow (my book, Early Bird: The Power of Investing Young), money to invest, and a contract to sign. They call it “The Investment Challenge”. On Christmas each grandchild received an envelope containing a contract for them to sign and a copy of Early Bird. The contract stated that they had to read Early Bird, and use the ideas in there to pick a stock to invest in. As long as they followed up and ran the analysis on the stocks, the grandparents would give them a certain amount of money every year for five years for investing purposes only. The deal was sealed when the grandchild sends a signed contract back confirming their investment choice, perusal of Early Bird, and commitment to this challenge.
Within their contract they explain the challenge, the power of starting early, and the risk. “In undertaking this challenge, you must understand that investing carries some risks. Not all investments make money, so you’ll need to study how to invest safely enough to protect your original investment. We are doing this to stimulate you to learn more about money and investments. The time to start is now.”
Their idea started out as an one year plan, but they both decided this present needed to benefit their grandchildren for the long run. “If we start young people investing, it needs to go forward not a single shot so to speak,” says Bob.
I’m proud to say my book, Early Bird: The Power of Investing Young, was a gift to many people over this winter, but this is by far the best plan I have seen to add more incentive for early birds to invest and get started.