In 1970, my cousin Betty gave me Creedence Clearwater Revival's "Bayou Country" for Christmas. You couldn't do much better than that for a teenager. But it was easy to do much worse -- another gift was an album by the Archies, which was not on my list for Santa.
I used to have trouble buying appropriate Christmas gifts for teenagers. Who knows what music they like or what they wear? But at my house, we've solved that problem.
A gift for the future
Instead of worrying whether teenagers even set foot in stores like the Gap (NYSE: GPS ) anymore, or whether the kids have every song they'd ever want from Apple's (Nasdaq: AAPL ) iTunes, we've found a better option.
We buy I-bonds in their names. I-bonds are savings bonds issued by the U.S. Treasury. Kids can't open their own accounts with the Treasury, but adults can buy bonds for them in their names. Every December, a $25 I-bond is put into a Gift Box linked to Uncle Buz's (a.k.a. "St. Nick") Treasury Direct account. It stays there, safe, sound, and earning interest based on the inflation rate -- well after some more fashionable gift has been broken, lost, or forgotten.
Of course, a broad-market exchange-traded fund such as the iShares series offered by Barclays (NYSE: BCS ) , would be a better option ... for them. But paying a $10 commission for a single share of an ETF is a bit much for me. My hope is that when they turn 18, they can take that bond money and make some more diversified investments.
Actually, my nephew Fraser recently turned 18. Next week, Uncle Buz is going to walk him through setting up an online Treasury Direct account. It will be linked to his savings account, and he can do whatever he wishes with it.
Teaching my nephew a little about how electronic banking works may be the best gift he could get. He already knows how to spend money online just fine.