Children & Money: An Introduction to DRiP

Over the past 2 months, I have been accumulating my first share in a number of companies to get setup with Full DRiP under Computershare and CIBC Mellon (also referred to as the Transfer Agents). It has been a very easy process but you don’t want to be in a rush. That’s why I have ordered a good number of shares at once in order to be ready.

Being an Owner
Children learn by watching and experiencing at an early age. There is nothing better than a share certificate to easily feel what ownership means. I experienced a little tingling when I got my first share certificate and looked at it. The tingling didn’t last long but it was there. Imagine how pronounce that tingling can be for a child when they see their name on the share certificate. This is going to be a topic of conversation at school and a new beginning in discussing money.
Getting Them Involved
A friend shared his process of getting his kids involved and I thought it was brilliant and I will do the same once I have everything setup to transfer shares to them. He made some drawing on cards that represent the companies’ business, he explained the different companies a little in simplistic words and then he let them pick a company. This process has the children involved in picking the company that they will be able to monitor as they grow. When the share certificate comes in their name, it will be a result of their choice. If you can do more than one, it may be interesting as your child can also learn to compare the two as they grow. It can lead to comparing the following:
  • How much is each investment worth compared to each other?
  • How much dividends each pay?
  • How many shares do I have in each?
These questions, as they get older, will get them to exercise some mathematics to calculate scenarios (hopefully, I know I did).
Compound Growth Learnings
My plan is to contribute a small amount every year for them on their anniversary so that I can effectively teach them compound growth. Over the years, the theory of compound growth will realized itself in their account and it becomes a lot easier for them to understand. At a young age, I feel it’s important for children to experience it, it’s the best way to learn. Since their financial education is important to me, these monetary gifts to build a DRiP account is basically my cost for their financial education. A small price to pay for their financial success.
I know there are many people doing this already with their children – great initiatives everyone. One important factor is to pick a company that participate in the Dividend Reinvestment Plan. Otherwise the benefit of compound growth is lost.
Have a nice day!

About EdR

Tant que les lions n’auront pas leurs propres historiens, les histoires de chasse continueront de glorifier le chasseur. (proverbe africain)

Posted on February 2, 2011, in drip. Bookmark the permalink. Leave a comment.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: