I invest in the stock market for my children for Christmas; There are no gifts

• Lel Smits and her husband invest in stocks for their children as Christmas gifts to build wealth.
• Smits prioritizes financial literacy and chooses stocks from companies her children are familiar with.
• She also creates stock certificates and drawings to help her children visualize their investments.

This spoken essay is based on a conversation with Lel Smits, an entrepreneur, director and mother of two in Sydney. The following has been edited for length and clarity.

I advocate financial literacy, I’m the managing director of The Stock Network and I’m a director of the Australian Shareholders Association.

I have invested in my children for Christmas every year since they were 1 year old. My oldest son is almost 5 now and I also have a 2 year old daughter.

While ‘Santa’ covers the Christmas gifts, we tell them that the gift from their parents is this investment. Birthdays are known for gifts.

I’m not a professional investor, but by understanding the basics, like picking quality companies and diversifying, I learned that consistent, disciplined investing can build wealth over time and provide financial security.

I invest about a day’s salary for each child

Each year, my husband and I determine an appropriate amount to put toward an investment gift. It’s similar to how my grandmother might have bought me some meaningful jewelry. I want to buy something meaningful for my children that I hope will stand the test of time.

I invest in companies that my children know and interact with, such as Australia’s largest bank and supermarket. I choose individual stocks over managed funds for my children because they represent tangible companies that are easier for them to understand and relate to.

While ETFs and managed funds are a core part of my diversified investment strategy, my focus for my children is to foster financial literacy and investment growth. This approach helps them understand the basics of investing.

I’m dedicated to making investments relatable, sparking their interest, teaching them how businesses work from an early age and involving them in the process.

I have a few key fundamentals that are important to me when picking stocks

I didn’t grow up financially literate. My parents didn’t actively teach me, but they instilled basic concepts like ‘Don’t spend more than you earn’ and ‘Interest works while you sleep.’ My investment knowledge accelerated while working as a financial journalist.

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I opened a stock account for my children when they were born and linked my bank to a stock trading account to manage their investments. This allows me to buy shares directly on their behalf.

I focus on profitable companies with strong financials, steady growth and a proven track record. I also like to diversify across industries. I don’t want my children to be only in a sector that I think is good. I have invested in the consumer goods, technology and healthcare sectors to reduce risk.

Since I am a very active investor myself, I am constantly researching and reading company reports.

I create stock certificates and pictures about investments so my kids can visualize stocks

I print a brochure that says ‘my investment’ for them and create a share certificate that looks like something you might have received 100 years ago.

I also draw pictures to accompany the investment, like a supermarket or a pizza shop. Visualizing it is my commitment to their learning and making tangible money.

I’m working on a book called ‘ABC of the ASX’ which explains the major companies to children so they can start to understand investing.

We will hand over the portfolio to the children when I am confident that it will be managed as carefully as it was created.

My five year old is starting to engage and ask big questions

My kids have never complained about the investment gift. Thankfully, Santa takes care of the ‘exciting’ toys at Christmas, so the investment is considered an extra.

The boy started asking me: “How did I get this money?” and “How can I make more investments myself?” This brings up the issue of work, and we discuss what work is and how to make money.

To a child, the idea of ​​ownership is amazing. By entering a supermarket, we talk about spending our money in a place where we have an investment. I think this has increased his worldview at a very early age.

My friends are starting to ask how they can do the same for their children

My clearest message is that investing can be very simple if you focus on the basics.

Investing through trusted institutions and selecting quality companies with earnings can simplify what can be a very overwhelming process, even for adults.