Christmas is nearly here. Under the tree there'll be parcels, squeals of joy… and, by February, plenty of toys forgotten at the bottom of a box. Many grandparents ask themselves: what if one of our presents could last longer?
The gift that grows
Imagine grandparents who give their grandchild CHF 200 a year (CHF 100 on their birthday, CHF 100 at Christmas), from birth until they turn 17. In total, they'll have given CHF 3,600.
If that money is invested and earns 4% a year on average, the snowball does its work:
- at 18, the child has about CHF 5,330;
- if they leave it untouched until 30, about CHF 8,540.
Enough to pay for driving lessons, a training course, a first flat. Or, better still, the start of their independence. That's a present they'll remember.
The best gift is knowledge
Money alone isn't enough. The economists Annamaria Lusardi and Olivia Mitchell measured, in many countries, what adults know about three very simple ideas: interest, rising prices, and not putting everything in one basket. The result: a large share of adults don't get all three questions right. And those who do understand them plan their future better and save more.
Money without instructions can melt away in a single summer. Money that comes with an explanation becomes a lesson for life. Grandparents have a unique role here: they have time, experience, and often stories about what a loaf of bread or a bike used to cost.
Three ways to give
- Half and half. A small toy for the joy of the moment, and a sum that goes into the "Grow" jar. Fun now and a future later.
- The letter that goes with it. Every year, a few lines: "This year, your gift grew by this much. Here's why." By 18, your grandchild will have a collection of letters, and a real understanding of money.
- The shared gift. For a goal the child has chosen (like Buddy's bike), the grandparents promise to add a sum once the child has saved half themselves. The gift then rewards their effort.
One important point: talk to the parents first. They decide how their child's money is managed, and a shared plan is always stronger.
Try this tonight with your child (or grandchild)
Sit down together with a sheet of paper. Grandpa or Grandma tells what they could buy with one franc at the age of 10. The child writes next to it what they can buy with one franc today. Then, together, imagine what their gift that grows will be worth at 18, and what they'd like to do with it.
Read also: The snowball: the trick nobody explained to you
Further reading
- Lusardi, A. & Mitchell, O. S. (2014). The Economic Importance of Financial Literacy: Theory and Evidence. Journal of Economic Literature, 52(1), 5–44.
Give a gift that grows with them. Join the Mangosteen Buddy waitlist: Book 1 of the comic is free, and the first 500 families get their first year of Premium on us (worth CHF 150). A lovely gift idea to share with the grandparents. Save my place
Educational content, not investment advice. Returns are not guaranteed.