Earn Your Leisure Podcast Episode Summary

Title: Why Stocks Are the Best Gift You Can Give a Child
Hosts: Rashad Bilal and Troy Millings
Release Date: March 21, 2025

In this compelling episode of the Earn Your Leisure podcast, hosts Rashad Bilal and Troy Millings delve into the transformative concept of stock gifting as the quintessential present for children. Moving beyond traditional toys and gadgets, the hosts explore how investing in stocks can lay a robust financial foundation for the younger generation. This detailed discussion encapsulates the advantages, logistical considerations, and long-term benefits of choosing stocks over conventional gifts.

1. Introduction to Stock Gifting ([00:58] - [01:03])

The conversation begins with the hosts introducing the concept of stock gifting, highlighting its potential to foster financial literacy from an early age.

Speaker C:
"So the last one that we'll talk about is stock gifting."
([00:58])

2. Advantages of Stock Gifting Over Traditional Gifts ([01:03] - [02:53])

Speaker D emphasizes the shortcomings of traditional gifts, such as toys, which depreciate in value after use. He contrasts this with the enduring benefits of stock investments.

Speaker D:
"It's cool to have cool toys and have nice items. But those items are going to hold no value after we open and they're not going to appreciate in time... Whereas if we put it into an investment like a stock or an ETF on index, we know long term that that's going to appreciate."
([01:03])

Key Points:

• Depreciation of Traditional Gifts: Toys and collectibles lose value once used.
• Appreciation of Stocks: Investments in stocks or ETFs tend to grow over time, offering lasting value.
• Educational Opportunity: Gifting stocks serves as a practical lesson in financial responsibility and investment.

3. Tax Benefits of Stock Gifting ([02:53] - [04:16])

Speaker C introduces the tax advantages associated with stock gifting, making it an even more attractive option for financial planning.

Speaker C:
"The IRS allows tax free gifts of $18,000 a year... you can literally take $10,000 a year and gift it to your child or to your grandchild and that's tax free."
([02:53])

Key Points:

• Annual Gift Exclusion: Up to $18,000 can be gifted tax-free, allowing significant investment without tax implications.
• Compounding Growth: Even with substantial annual gifts, the power of compounding can significantly enhance the investment's value over time.
• Versatility of Assets: While the focus is on stocks, similar principles apply to other investment vehicles, providing flexibility in asset allocation.

4. Implementing Stock Gifting ([04:16] - [05:27])

Speaker D provides actionable steps for listeners interested in adopting stock gifting, emphasizing the importance of setting up a custodial account.

Speaker D:
"Open the UPMA account. Right. That UPMA account is super important... Open a UPMA account and just open it. Put $500 in there... Make sure that there's a plan to put assets so it can accumulate to something that's going to be worthwhile in the future."
([04:16])

Key Points:

• UPMA Accounts: Establishing a Uniform Transfers to Minors Act (UTMA) or Uniform Gifts to Minors Act (UGMA) account is crucial for managing gifted assets.
• Initial and Ongoing Contributions: Starting with an initial investment and committing to regular contributions ensures sustained growth.
• Diverse Asset Allocation: Encourages investing in a variety of assets, including stocks, real estate, or even cryptocurrencies like Bitcoin, to diversify the investment portfolio.

5. Educational Impact and Long-Term Benefits ([02:53] - [05:27])

The hosts discuss how stock gifting not only builds financial wealth but also enhances financial intelligence among children.

Speaker D:
"It can accumulate to something that's going to be worthwhile in the future... it now becomes a teaching lesson... increase the intelligence of a child... build education in a community."
([01:03], [04:16])

Key Points:

• Financial Literacy: Children learn the value of money, investment strategies, and the importance of saving.
• Empowerment: Educated children are better equipped to make informed financial decisions as adults.
• Community Influence: Financial education can have a ripple effect, promoting broader economic literacy within communities.

6. Conclusion and Call to Action

The episode wraps up with a strong encouragement for listeners to consider stock gifting as a viable and impactful option for their children's futures. The hosts underscore the importance of proactive financial planning and the benefits of starting early.

Speaker D:
"This is a definite must if you're trying to build wealth for your children. ... Don't just leave it at the 500 that you did to open it and thinking that it's going to grow."
([04:16])

Speaker C:
"That's another benefit of, you know, gifting is that the tax aspect of it, like that's a great way to utilize the tax system in America and to still benefit the next generation."
([02:53])

Speaker D:
"Make sure that there's a plan to put assets so it can accumulate to something that's going to be worthwhile in the future."
([04:16])

Key Takeaways

• Stock Gifting as an Investment in the Future: Unlike traditional gifts, stocks offer enduring value and growth potential.
• Tax Advantages: Significant tax benefits make stock gifting an efficient way to transfer wealth.
• Educational Benefits: Introducing children to the stock market fosters financial literacy and responsible money management.
• Actionable Steps: Establishing a custodial account and committing to regular investments are essential for maximizing the benefits of stock gifting.

Final Thoughts

Rashad Bilal and Troy Millings effectively argue that stocks are not just financial tools but instruments of education and empowerment for the next generation. By choosing to gift stocks, parents and guardians can provide their children with both immediate and long-term financial advantages, setting them on a path to financial independence and success.

For More Information:
To explore the benefits of stock gifting and other financial strategies, visit Earn Your Leisure and follow their updates on the latest trends in finance and business.