I’m proud to announce that I’ve joined the board of advisors for SparkGift, a company with an amazing service I can’t wait to tell you about.
SparkGift has created a seamless, simple way to give shares of stock or a fund to someone else as a gift. Up until now, this kind of thing was only possible with an enormous headache involved, especially when the recipient was a minor child.
UGMA accounts, trust paperwork, brokerage transfers, and all other manner of annoyingness made it so that the gift had to be a substantial one in order to make it worthwhile to go through. This precluded the kind of small, casual stock gift-giving that would otherwise serve to spark a lifelong interest in investing, which is exactly what we should all want for our young friends and family.
With SparkGift, everything changes. Now you can give your daughter $500 dollars worth of the Vanguard 500 fund, just to get her started. You can give your teenage son a few shares of Facebook (rather than an American Express gift card that will be spent immediately). You can give shares of Google or Berkshire Hathaway or the Dow Jones Industrial Average ETF or any stock / fund you’d like for weddings, birthday parties, communions, sweet sixteens, baptisms, christenings, coming home parties from prison, whatever!
Let me tell you about my stupid Bar Mitzvah money (it’s all gone now anyway). The way these things work, on Long Island where I grew up, is that parents throw a party that costs between $30,000 and $100,000 in the hopes that the cash gifts of their guests will add up to $10,000 or so. It’s the thought that counts.
Back in 1990 when I turned 13, the hot thing (aside from C+C Music Factory and MC Hammer) was giving kids government savings bonds on their Bar and Bat Mitzvahs. How stupid is that? Sorry Aunt Gladys.
And while giving cash is fine, cash has a funny way of being spent prematurely on things that are maybe not so important in the long run (I’m being polite here). Or worse, gifted dollars can find their way into a high-cost brokerage account or mutual fund situation that forever inhibits their ability to earn their true potential returns.
Handing a kid a check or a savings bond to tuck away in a low interest-bearing account is not the end of the world, but it’s far from optimized. The one thing that young people have as an advantage over everyone else is spelled T.I.M.E. That means they can see their money compound in the market for longer, and the effects of compounding over a decade or more are indistinguishable from magic.
So cash is cool, but you know what’s cooler than cash? Cash that works for you every single day, while you’re living and while you’re asleep. From now on, when I’m giving gifts, I’m giving investments.
As a financial advisory firm, we spend a lot of time on eduction because we think it helps our clients become better investors and it makes our job easier. Imagine being able to begin that education process with people in their teens, in their twenties, before they amass enough money to be in a position to make big mistakes. I think SparkGift perfectly addresses this idea and I plan to take full advantage of it.
I won’t get too in-depth on the mechanics of the service, but what Peggy, Bob and Tia have built so far is quite amazing. My first gift purchase for my brother’s kid took me all of 2 minutes. I couldn’t believe how easy and well-thought out every step in the process was. Essentially, I selected a recipient and provided their email address (my brother’s in this case) and then selected the investment and dollar amount. The transaction doesn’t happen until my brother opens the email and creates the account (also a cinch, from what he told me later that day). At that point, my payment is used to execute the trade and the security ends up in the account, in my nephew’s name.
My three year old nephew now has his first investment and I was able to buy it for him with a few spare minutes and a credit card.
A stake in the future prosperity of American business is the greatest gift you can give a young person. SparkGift makes it incredibly simple to give that gift. This has the potential to be huge.
I want to thank Peggy Mangot and the rest of SparkGift’s team for getting me involved. I’m thrilled to be their evangelist on Wall Street and on the financial web.
Some other press about SparkGift worth checking out:
Now Giving Shares Is as Easy as Giving a Gift Card (TIME)
Want to get a kid interested in investing? Start with a note as thoughtful as the ones here (Quartz)
Two Former Googlers, Backed by Y Combinator, Want You to Give Kids the Gift of Investing (Recode)