Gifts That Grow
Sydney Morning Herald
Wednesday December 11, 1996
Potentially profitable presents that will please.
TIRED of Christmas gifts that are broken, lost or discarded by February? Or maybe just looking for something a little bit more interesting for young Simon than another Mambo T-shirt?
Well, how about combining financial smarts with this silly season and looking for a gift that grows. Whether your budget is $20 or $2,000, there are gifts that can increase in value, give your loved ones better money management skills, or encourage them to build up a tidy nest-egg for Christmases to come.
The following list is a start - but by no means exhaustive.
BOOKS
Cheap but effective - and a lot more cheerful than they used to be. Whether you are buying for a money professional or a financial ignoramus, there should be something on the market that will suit.
Dymocks bookshop in the city says it has two personal finance books among its five best-selling business books: Vivienne James's The Woman's Money Book (Anne O'Donovan Pty Ltd, RRP $19.95) at number one and Paul Clitheroe's Making Money (Viking, rrp $19.95) at number three.
Other good sellers are Art of Investment by Barry Dunstan (Fairfax Publishing, rrp $22.50), Fortune Strategy by Arun Abey and Ean Higgins (Allen & Unwin, rrp $24.95), Share Trading by Daryl Guppy (Wrightbooks, rrp $34.95) and How the Stock Market Really Works by Martin Roth (Wrightbooks, rrp $19.95).
Money's own Answers columnist, Noel Whittaker, rates a mention. Dymocks says his 1994 volume, Living Well in Retirement (Simon & Schuster, rrp $19.95), is selling well. He has also just published a new book, Golden Rules of Wealth (Simon & Schuster, rrp $19.95), which will be available for Christmas. (Money has 50 copies of Golden Rules of Wealth to give away - see next Wednesday's paper for details.)
If this isn't enough, Angus & Robertson's city store says its best-selling personal finance authors are Clitheroe (Making Money), Jan Summers (Building Wealth Through Investment Property and Building Wealth in Changing Times, both $24.95 from Somerset Financial Services) and Faith Popcorn (Clicking Harper Collins, rrp $19.95).
COLLECTABLES
You can go out and buy your loved one a $100,000 Brett Whiteley painting - or you can do what the rest of us do and opt for something simpler and cheaper. A director of James R. Lawson Auctioneers and Valuers, Sally Hardy, says limited edition etchings, lithographs and monotypes offer striking images by well-known artists but cost substantially less than a major oil painting.
Lawsons had a Works on Paper auction last night offering items such as Charles Blackman monotypes, with estimates at $250 to $1,200. Hardy says Lionel Lindsay woodcuts and etchings are "starting to move again" at prices around $350-$450 while Norman Lindsay etchings are also selling well.
If art isn't your bent, collectables range from phone cards to coins to stamps and antiques and decorative arts.
Maybe some yellow metal has appeal? The Perth Mint marketing director, Veronica Maguire, says it has a wide range of precious metal coins in bullion and mint quality to suit most budgets. Silver bullion starts at $16 an ounce and gold at $36 for one 20th of an ounce.
Limited edition coins are more expensive.
The investment potential of these metals depends on wholesale metal prices (which may fall further) as well as any value collectors choose to put on various offerings. Coin dealers can help with precious metals as well as other coin offerings.
MONEY
If imagination fails, cash has never failed as an acceptable Christmas present. But why not encourage that cash to grow? With the "reward" style savings accounts, there is a real incentive to leave the money in the account and add to it. Reward accounts pay a higher interest rate if you make a deposit each month, which means the recipient can spend the money or use it to start a savings program.
Cassandra Williams, a financial analyst at the research company, Cannex, says accounts can be opened for $1 at Advance, ANZ, Commonwealth and Westpac. But to qualify for the bonus rates, Advance and ANZ require a $500 minimum monthly balance.
The only problem with opening a bank account for someone is the level of identification required. The Commonwealth Bank's head of group corporate relations, Ms Lyndell Fraser, says you will have to open the account in your own name as trustee and give the passbook and transfer forms to your intended recipient.
How about making an extra payment on your loved one's mortgage? Just one additional payment can help pay off the loan faster - and gives him or her a buffer against problems later on. Most home-loan contracts allow extra payments without penalty, but check before you go ahead.
INVESTMENTS
Generally, at least $1,000 is needed to give an investment as a present. That lets you buy units in many managed funds or a reasonable parcel of shares. But there are cheaper alternatives.
One is to pay the minimum brokerage level ($50-$60) through a discount broker to buy a small number of shares to help someone get started.
Now the Australian Stock Exchange has abolished minimum tradable parcels, you can buy small numbers of shares in a company - so long as you are prepared to pay the brokerage.
For those on a bigger budget, the Commonwealth Bank's stockbroking arm pre-packages such parcels in its Aussie Share Packs - which sell for about $3,000 or more.
If you are more adventurous, you could go for a larger parcel of shares in a penny dreadful such as a gold miner or a technology company. But these are high risk and probably better confined to gift-givers with the knowledge and resources to separate the winners from the dogs.
There are limitations with both types of shares as a present, the most notable being that a few shares are no substitute for a broader portfolio.
But it is amazing how much more interested in matters financial you can be when you have a reason to be so. Maybe you can supplement the gift with an Australian Stock Exchange introductory sharemarket course?
Rothschild Australia Asset Management suggests signing a loved one up for a savings plan in a product such as its Five Arrows Australian Share Fund. Where many unit trusts require a $1,000, $2,000 or even $5,000 initial investment, Rothschild says you can sign up for as little as $200 a month. Maybe you can make the first one, or five, payments - or perhaps commit to sharing part of the cost each month?
These sorts of gifts are ideal for providing a better future for children or grandchildren. Savings plans are also available on balanced funds and those at the lower-risk end of the investment spectrum.
A Bankers Trust director, Terry Power, says you can invest in a range of BT trusts - including its life-cycle oriented Lifetime trusts - for as little as $1,000 plus $100 a month. The upfront fee is generally 3 per cent.
And Commonwealth Financial Services has the option of opening a savings plan for as little as $100 - so long as you commit to invest another $100 a month.
© 1996 Sydney Morning Herald