For a state that’s been pretty generous with its youth of late — free community college, for starters — the CT Baby Bonds program is another big step. From July onward over the next 10 years, the Connecticut treasurer’s office will set aside $3,200 for babies who enter the world to families who qualify for Medicaid benefits under the state’s Husky programs. Between ages 18 and 30, those beneficiaries can then use the principal and interest to pay tuition or mortgage payments, or seed a business or retirement account.
It raises the larger question of just what makes a great financial gift for a newborn in your own family. Here are some options.
Big bonds — the U.S. Treasury variety — are one way to go, backed by the agency that scraped together more than $2.5 trillion (and counting) to get the nation over the pandemic’s economic hump. As of June there were $3.2 trillion in Treasury bonds outstanding that reach maturities 10 years after their purchase, not including notes and bills with shorter spans to maturity.
For some investors, the downside of investments in T-bonds is the long road to maturity and any lost opportunities along the way by locking up cash — but that obviously is a plus in the context of setting up a young child to come into the money in a distant future. And with the I-word looming large this year, Treasury inflation-protected securities are one option to limit risk.
You can buy U.S. Treasury bonds online at treasurydirect.gov or through your broker or bank.
College 529 plan
Community college is free in Connecticut — as long as the legislature sees that as a good investment in the state’s future, anyway — but not so for UConn or any number of public or private schools where tuition hikes continued right through the pandemic.
The best way to stay ahead is seeding a college 529 plan early and padding it over time, whether through the Connecticut Higher Education Trust whose investments are managed by Fidelity, or others with investments managed by T. Rowe Price, Vanguard and other mutual fund giants.
Maybe you can get a kid excited about the future value of a T-bond. But wrap a Sesame Street plush in some shares of Hasbro, or the next Marvel movie in Walt Disney stock, and you might perk up some interest in the moment while setting up the potential for an investment that appreciates over time — in some cases, big time.
A select stock can convey lessons over time depending on the focus of that particular company, for instance, climate change via shares of alternative energy innovators and others with parts to play in sustainable living. And it’s a great way to introduce financial education that can help a child learn as they grow with a real stake at stake, and so be better positioned to make good decisions themselves one day.
Here’s one way to look at it — for today’s 40-year old who received 10 shares of Hershey stock in 1981 with an accompanying candy bar (costing about $25 and spare change on an adjusted basis back then), that stake would be worth around $1,750 today. If a 70-fold increase is not on par with Willy Wonka’s golden ticket, it’s an investment any of us would have been glad to get.
Pieces of history — or objects with potential to become historic artifacts depending on future events — is a dicier proposition. Two cardboard trading cards from 2000 of an unheralded NFL rookie named Tom Brady were auctioned off this year for a combined $5.3 million. But last year alone, 4 million trading cards were bought on eBay, the vast majority for dollars or pennies.
Some tangible items hold value with fair consistency, however, or go through boom cycles that provide peak opportunities to cash out. Gold and other precious metals are one obvious example, including collectible coins from manufacturers like The Danbury Mint or those of historic vintage. There’s artisan jewelry, or even engraved bullion for safekeeping until a child comes of age.
Gold trades today at quadruple its value in 1981 — but it flat-lined for two decades before starting an extended run-up in value, factoring in a hiccup five years ago and subsequent recovery. As much as stocks (and not bonds), gold’s a bet.
Bitcoin? From about $325 in 2015, it shot to nearly $20,000 in two years and then tripled that amount as of this year. More to come, or less.
And there are any number of digital assets coming into the realm of reality, according to Mike McGuire, CEO of the digital exchange Symbridge, based in Greenwich. “Educate yourself about it and see if it’s something that’s interesting to you or makes sense, because it’s a whole new way of thinking about monetary value or stored value,” McGuire says. “For the sophisticated investor, I would suggest looking outside of just the Bitcoin space. … Look at some of the other assets that are starting to trade — for example, asset-backed tokens, a token that is backed by a physical metal like palladium, platinum, cobalt, nickel — a lot of these metals that are really important in emissions reduction.”
Words of wisdom
Whether an incurable financial neophyte or a sophisticate, the most important gift might be the little accompanying note of advice you include for the adult-to-be one day — of the world in which you live and your own valuable lessons in generating savings; and of any opportunities or fulfillment in life those decisions may have helped underwrite.
The wisdom of years, after all, is among the greatest gifts we have to bestow.