It's the holiday season, and that means scrambling to figure out what presents to buy for everyone on your list. As we all know, the process can get a bit tiring and some people on that list can end up getting a little shortchanged as holiday-shopping exhaustion gets the best of you.
But before you decide that a fruitcake, bold-striped sweater, or Chili's gift card is the best you're going to be able to do, why not think about giving them a financial leg up with a great investing gift? Here are five such gifts that could turn your holiday generosity into a very wealthy future for your recipient.
1. One Up on Wall Street
For the budding investor, this is one of the best books out there. The author, Peter Lynch, has his picture hanging in the investing hall of fame, as he spent his career not just beating the market, but destroying it. Of course, that alone doesn't make the book great. It's also engaging, easy to read, and presents concepts that are accessible for all levels of investors. Consider it part of the required reading list for Investing 101.
2. The Intelligent Investor
If you're going to cook, you read Julia Child. If you want to play golf, Tiger Woods isn't a bad direction to turn. But if you want to be an investor, you've got to read Ben Graham. Yes, that's a bold statement, since Graham focused on a specific type of investing -- value investing. But if you ask me, value investing is the only worthwhile investing.
Graham's first book was Security Analysis, a dense tome written in the aftermath of the Great Depression. The Intelligent Investor is a much-more-readable follow-up that benefits in its newer printings from some great commentary from Jason Zweig. While The Intelligent Investor is a far easier read than Security Analysis, it's still a very heavy read, so if we're calling One Up on Wall Street part of Investing 101, The Intelligent Investor is part of the 200-level courses.
3. HP 12c Financial Calculator
These days, we primarily think about Hewlett-Packard
In fact, when I started in private equity, I had what I considered at the time to be a "normal" calculator. It wasn't a clunky Texas Instruments graphing calculator, but let's just say it was a second cousin. My boss at the time heckled me for weeks about the calculator (you need a thick skin in that industry), until I finally broke down and got an HP 12c. Today, I still have the same one -- bruised and battered but still perfectly functional -- and despite having three computer monitors in front of me while I work, it still carries the load when it comes to quick calculations.
Don't think a calculator is an exciting enough gift? John Malkovich disagrees.
4. Motley Fool newsletter subscription
Yes, I do work for the Fool, so perhaps I'm a bit biased, but I'm a fan of the Fool's newsletter products. I have a lot of respect for the advisors running the newsletters, and I think they not only come up with some great picks, but do a really good job breaking them down to give readers the scoop on exactly why they're recommending that particular pick.
And while investors can learn a lot from the picks that the advisors make, each newsletter also has a community around it that digs further into the picks, and delves into a variety of other investment topics. Most people likely sign up for newsletters specifically to get the picks, but I think the newsletter discussion boards offer some top-notch investing training grounds.
There are a variety of Fool newsletters that could suit the taste of any investor on your list, but Stock Advisor is a great place to start, thanks to its eclectic investing style and thriving community. (If you must berate me for bringing up the newsletters, go ahead. That's what the comments section is for ... sort of.)
5. Stock
Reading about stocks is a great way to learn, but putting some actual stock ownership in an investor's hands -- particularly a new investor -- can often supercharge the process. There are companies that allow you to buy a single share of stock and will send you the stock certificate. Pair that with the company's most recent annual report -- which you can request online for free from most companies -- and you've got a pretty kickin' gift.
But what stock should you choose? If we're talking about a new investor here, it's best to go with a company that's easy to understand, in an industry that they're already familiar with. And since you probably want to avoid having the experience become a lesson in what makes a stock plummet, you probably want to stick to stocks that currently carry a reasonable valuation.
Here are a few suggestions:
Company |
Business |
Dividend Yield |
Forward Price-to-Earnings Ratio |
Return on Capital |
---|---|---|---|---|
Intel |
Computer chips | 2.9% | 11.0 | 20.9% |
PepsiCo |
Beverages and snacks | 2.9% | 14.3 | 16.5% |
Boeing |
Airplanes | 2.6% | 14.1 | 24.5% |
Kellogg |
Cereal and convenience foods | 3.2% | 14.8 | 17.8% |
VF |
Designer clothing | 2.9% | 13.1 | 12.4% |
Source: Capital IQ, a division of Standard & Poor's.
The stocks above come from a variation on my favorite stock screen, which provides pretty much all of the numerical essentials -- a healthy dividend, a reasonable valuation, and a company that produces attractive returns on its capital.
The stocks that I've picked from the larger list are businesses that even a new investor should be familiar with and able to dive into. Intel provides the processor chips for much of the computing world, PepsiCo sells a variety of beverages along with snacks like Doritos, and Boeing builds the massive airplanes that dominate our skies. Kellogg is also on the food side, making my personal favorite food product, cereal, and VF owns a stash of clothing brands that includes 7 for All Mankind, The North Face, and Wrangler.
And a stocking stuffer
What could top off these gifts? Well how about a Foolish special report detailing five stocks that The Motley Fool owns and are still great investments today? Better still, this little investing treat is free.