Welcome to this week’s newsletter. Here’s also saying welcome to school runs as children resume school across Nigeria.
You would have had to be in a cave last week to have missed the news of the Ferraris Nigerian businessman, Femi Otedola bought for his daughters.
Mr Otedola, being the savvy businessman that he is, most probably picked the Ferrari brand because it has a higher resale value (75-90% of original cost) than most other exotic brands.
He definitely isn’t the first parent to buy his child(ren) an expensive car and won’t be the last. In 2010, American rapper, Sean Combs made the headlines when he bought his then 16 year old son a Mercedes Maybach valued at that time for around $360,000.
You will agree with me that both men could and can afford to do so. For those of us still aspiring to purchase our own Ferraris/Maybachs; we will be discussing some examples of financial gifts we can give our children that will also encourage a savings or investment culture.
Please note that I am not against giving expensive gifts to children, it is just that wealthy parents tend to have much larger budgets than most people so it is best to give gifts that are durable in nature, and do not depreciate over time unlike the latest phones, game consoles or even cars.
Mind you, the aim is to purchase the gifts in the name of beneficiary and hand over during ceremonies (birthdays, festivities, graduations etc) as opposed to just investing in their names as ownership tends to convey a deeper sense of responsibility.
Below are some gifts ideas of what we can give our children even as the festive periods are fast approaching:
- Shares: these remain a very common and popular choice of gift and a perfect way of teaching children about investing in the stock market.
The aim is to make the child aware of the ownership and encourage him/her to continue to make subsequent investments independently.
- Cash: is really king and a good way of teaching children delayed gratification.
It also allows the child the freedom of choosing what to do with the cash.
- Long term government securities: although the yields are currently low, Federal Government and Savings Bonds are very good examples of long term gifts for children.
In addition to the interest income and future redemption, they can even be used as security for any borrowings.
- Skill acquisition: as the saying goes, “give a man a fish and you feed him for a day, teach him to catch a fish you do him a good turn”. Many a child have found their calling through an extracurricular activity.
A friend recently showed me the social media account of a business owned by a Nigerian student schooling in the US. The lady had learnt how to braid hair and make wigs before travelling and turned that knowledge into a lucrative business even as a student.
- Businesses: parents can teach their children financial responsibility by helping them set up small businesses from an early age.
Most times, these businesses are retail in nature – selling confectionary and the likes at school or the neighbourhood. Lemonade stands, though not popular in Nigeria are a perfect example of this. Many entrepreneurs got their start this way.
Earlier this year, a black American father bought his 10 year old daughter a vending machine as a way of expanding her sweet selling business.
This is also common amongst local traders or businessmen who open other outlets of their businesses for the children/wards as a way of passing on generational wealth.
- Seed capital to establish a business – much has been said and written about the loans (for seed capital) Aliko Dangote and Jeff Bezos received from their uncle and parents respectively.
Even though both men have clearly done well with the opportunities these loans afforded them, they were both more fortunate than their peers who did not have such support.
Seed capital does not even have to be repayable immediately; some parents/guardians have been known to make such gifts evergreen loans.
It sometimes also comes in kind and not in cash; many entrepreneurs either started or still use their parents’ properties as their business location.
The above list is certainly inconclusive as there are other interesting gift ideas for children. The aim is to ensure that the gifts are meaningful and can stand the test of time.
Many descendants of wealthy patriarchs and matriarchs tend to appreciate the foresight shown by their ancestors who had invested with the future in mind.
Kindly remember that there is still no cure for the corona virus and that prevention is always the better option.
Please stay safe and continue to take personal responsibility for preventing the spread of the disease in Nigeria.
Keep washing your hands, maintaining social distancing and wearing your face masks in public.
Till next week, here’s wishing you a fruitful week ahead.