An Investment Gift to My Son That I Hope Will Keep on Giving

On Our Minds...

This holiday season, I've been struggling with what to give my 19-year-old son. It's not that he's hard to buy for; after all, he's a second-year university student living away from home, so any food-related gift card would do!

However, working in the world of finance has got me thinking a little differently this year. I'd like to give a gift that has the potential to keep on giving.

When I was growing up, Canada Savings Bonds were my parents' go-to presents. On Christmas morning, my brother and I would find the familiar sticker-clad envelopes under the tree. Admittedly, it wasn't as exciting as getting trendy toys or clothes, but our parents were helping us get in the habit of saving — a gift much appreciated, in hindsight.

I thought about carrying on the tradition, but the Government of Canada stopped selling Canada Savings Bonds and Canada Premium Bonds in November 2017. Sales had declined, the program was expensive to run, and consumers can now choose from a wide range of alternative savings investments.

So, what could I give my oldest son to help him with his future? He knows the importance of saving money, and he already has a Registered Education Savings Plan (RESP). He's never been involved in choosing its investments, however. In fact, we've had very few conversations about investing.

So, as boring as it sounds (don't tell my son!), I've decided that when he's home for the holidays, we'll take our money conversations beyond day-to-day budgeting and into the potential benefits of investing.

In the spirit of "things I wish I'd known earlier," here are three things I'll touch on:

1. Time is on your side.

Compound interest wasn't on my radar at the age of 19. I'll explain that the earlier he can put money to work — even if it's just a small amount — the more he'll have down the road, thanks to the snowball effect of compound interest. (An online calculator will come in handy for a demonstration.)

2. Set goals, but don't let them overwhelm you.

The idea of setting big goals used to scare me, even as an adult, so it might be downright terrifying to a teenager. What eventually put me at ease? I heard someone say that yes, goals are important, but they don't have to be "forever" goals. It was like a light bulb went off! Goals evolve depending on where we are in life — and that's okay.

3. Just get started.

This is probably the most important thing to know about investing. Just start. It doesn't take a lot of money to get going – a small amount of savings or a few birthday, graduation and holiday gifts from family and friends can kick things off. Figuring out what to invest in is a different story, but that will come!

As for the right account, that'll be another part of the discussion. I lean toward a Tax-Free Savings Account (TFSA), in part because of its flexibility, but we'll explore other options like a Registered Retirement Savings Plan (RRSP) and more as well.

What investing wisdom would you pass along to a child, another family member or a friend? Leave a comment to spark ideas for others this season.

On Our Minds is a regular feature written by members of RBC Direct Investing's Inspired Investor content team.