Stocks for the holiday stocking?
Posted
Dec 19 2008, 03:01 PM
by
Andrew Horowitz
Rating:
What will be in your stocking? Investors are checking their bank accounts and brokerage statements to find a Grinch-y market. According to the American Research Group, consumers are planning to spend an average of $523 for gifts this holiday season.
Perhaps it is a good year to consider giving your children or family members something that has the opportunity to
While you may believe that buying a stock gift may be difficult, too expensive, not practical or just a bad idea considering market conditions, there are some benefits to consider. Market conditions are tough right now, but if your time horizon is 15 – 30 years as many of your children’s are then the stock you buy will outlast the computer that was outdated the day you bought it. Stocks are certainly priced lower than last year and believe me, I am not saying that we can't go lower, but this may be a good time to teach your children about finances. We all know how well recent generations have handled their finances: by racking up enormous amounts of debt via credit cards and out of control mortgage payments. This holiday season could be a great time to bond with your children and help teach them a better path.
Buying shares of stocks or mutual funds is as easy as online shopping these days. There are several brokerage firms such as E-trade, Ameritrade, Scottrade or Schwab that are willing to accommodate almost any size purchases you wish to make. There are even companies that allow you to buy fractions of a share of stock such as Sharebuilder.com (ING Direct) if you don’t think you can afford some of the high priced securities such as Google and Berkshire Hathaway CL B Shares . If you are hesitant to buy shares because you don’t think that such a small number of shares will really make a difference then let’s take a look at a few examples if you would have purchased some stocks 20 years ago and their worth today, adjusted for dividends and splits.
On 12/23/1988 you purchased:
38 Shares of Caterpillar at $5.20 for $200, it would now be worth approximately $1,400 (Or you could purchase your child a Caterpillar Backhoe Tractor for $200)
21 Shares of Apple at $9.51 for $200, it would be worth approximately $1,900 (Or you could purchase an Apple iTouch for $200)
666 Shares of Microsoft at $0.30 for $200, it would be worth approximately $12,500 (Or you could purchase the Xbox 360 for $200)
Related reading:
Apple losing its shine? Oh Please!
A year to remember - 6100 stores closed
Andrew Horowitz is a money manager and the founder of Horowitz & Company. He is also the author of the bestselling book, The Disciplined Investor . Check out his latest investment idea or listen in as he hosts, The Disciplined Investor Podcast.
