{"data":{"id":"f48e9d92-ab9b-4cfd-8c3d-01a5a0034b4d","updated_at":"2025-06-26T22:40:35Z","template_id":"73046548-86ec-431a-aca0-75b53bc936f3","localized":{"blocks":[{"id":"d530c208-0d64-4121-85a0-c234f04a1581","kind":"richtext","template_id":null,"content_html":"

As a grandparent, one of my wishes is to help my granddaughter gain confidence in financial planning and investing at an early age. When my granddaughter Elsie turned eight, I decided to set up a custodial account and gift $100 on her birthday to invest in the stock market. This annual gift will continue until she reaches adulthood when the custodial account automatically reverts to her control. Every year as Elsie grows older, I educate her on more and more sophisticated financial concepts. These birthday gifts have now been made over six birthdays. Here is an update on what she has learned so far:

Age Eight – The goal during this first year was to introduce the concept of stock ownership. Elsie was asked to pick two companies she would like to own. Not surprisingly, she picked Disney as her first choice and Apple as her second choice. I purchased $50 of each stock. Also, I printed and framed replica stock certificates for these first purchases.

Age Nine – The goal during the second year was to introduce the notion that stock prices can go up or down over time. Fortunately, Elsie made an investment gain during the first year. Elsie was also excited to realize she was earning dividends from stock ownership. In year two she picked two new stocks to own – Target and Gap.

Age Ten – For this third year, I graphed the price movement of each of the stocks Elsie owned, introducing the actual dollar and percentage gain or loss of each stock. She had stocks with both gains and losses – so I also included smiley, neutral and sad faces as appropriate on the graphs. I also included a graph of the S&P500 index and its percentage gain during the prior two years. I asked Elsie to invest in a S&P 500 ETF with a portion of her annual gift. Based on their poor performance, she sold Gap and purchased Roblox.

Age Eleven – For this year, I calculated the annual and total gains and losses for each stock and the S&P 500 index. As expected, the S&P 500 ETF showed up in the middle of the pack, demonstrating its ability to average gains and losses across many stocks. While this index ETF reduces the risk from poor performing stocks, it also misses the upside potential from owning very high-performance stocks. Roblox and Apple performed much better than the S&P 500 while Disney and Target performed considerably worse. Elsie learned that owning great and truly beloved companies (like Disney) does not guarantee great stock performance. Elsie chose to invest more in her winners: Roblox and Apple. Finally, I included a graph from Stocks for the Long Run by Jeremy Siegel showing the performance of stocks, bonds, treasury bills and gold over the last 200 years. Stocks won hands down.

Age Twelve – Elsie readily admits that investing in stocks is not her lifelong passion. She would prefer Taylor Swift, playing a cello in orchestra and sleepovers with her friends. While she appreciates my efforts to teach her something that is important to me, I can only engage her in investing once per year – unless she chooses to engage me! Elsie really enjoys math, so this year I included information on how to determine the “fair value” of a stock. We discussed the impact of earnings, pace of growth in earnings, price/earnings ratio and dividends. We reviewed this information for each of her current stocks. This was a bit too abstract. What I realized is that we could use the stock evaluations of investment advisory reports as a proxy to help “value” a stock. I printed out a Schwab report on Apple. In this year’s review, Elsie appreciated the value of investing in the S&P500 ETF (an exchange-traded fund that invests in 500 large capitalization stocks) rather than individual stocks. She threw a surprise at me. She wanted to invest half of this year’s $100 in a growth-focused ETF, and the other half in the S&P500 ETF.

Age Thirteen – As Elsie edges closer to college, I wanted her to become aware of how ETF’s fit into her college fund. We reviewed the current allocation of stocks and bonds in her College Enrollment Year 2030 Fund. This college fund currently has 52% invested in US-and-International stock index funds, and 48% in US-and-International bond index funds. I also showed her a graph of the anticipated changes in the allocation of stocks and bonds in this fund from age one (90% stock/10% bond) until she turns twenty (100% money market). We discussed why it is important to reduce risk in this fund as Elsie is getting closer and closer to needing resources for college. Elsie decided to invest this year’s $100 in the S&P500 ETF and Apple, even though Roblox had over a 150% gain in the prior year.

Next year – Elsie and I are going to discuss how to structure a financial portfolio around a specific goal. So far, the focus of investing has been on gaining experience with stocks and ETFs. It’s really hard to decide on what to invest in if you don’t have a goal for these funds. So, I asked Elsie to think about what goal she wants to achieve with these funds in the future.

Learning about financial planning is not a one-and-done process. Rather, it is a gradual process of introducing new information and concepts as each young adult matures. So, consider creating a financial legacy through these annual gifts to each of your grandchildren.

All for just $100 per year. What a spectacular legacy gift!

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Richard O. Weijo, PhD, received an undergraduate degree from Concordia College in Moorhead, Minnesota, and went on to receive his MBA and PhD degrees from the University of Minnesota. He was an assistant professor of marketing at the University of St. Thomas in Saint Paul, Minnesota. Weijo was also a senior analyst at the Pacific Northwest National Laboratory, and his most recent corporate position was as a manager of market research and director of customer channels at Portland General Electric. Currently, he is a consultant and a writer. He adores his young granddaughter Elsie, whose birth inspired his book, Remember Me: Creating and Leaving an Inspiring and Memorable legacy.

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