I invest a day’s salary for my children every Christmas instead of giving them gifts. I make it as interactive as possible, and they have never complained.

• Lel Smits and her husband invest in stocks for their children as Christmas gifts to build wealth.

• Smits gives priority to financial knowledge and chooses shares of well-known companies for her children.

• She also makes stock certificates and drawings to help her children visualize their investments.

This as told essay is based on a conversation with Lel Smits, an entrepreneur, director and mother of two in Sydney. The following has been edited for length and clarity.

I am a financial literacy advocate, director of The Stock Network and director of the Australian Shareholder’s Association.

I’ve been making Christmas dinners for my kids every year since they were 1. My oldest boy is almost 5 now and I also have a 2-year-old girl.

As ‘Santa’ covers the Christmas presents, we tell them that their parents’ gift is this investment. Birthdays are celebrated with gifts.

I’m not a professional investor, but by understanding the basics like choosing quality companies and diversification, I’ve learned that consistent and disciplined investing can build wealth over time and provide financial security.

Every year my husband and I determine an appropriate amount that we can spend as an investment gift. It’s similar to how my grandmother bought me meaningful jewelry. I want to buy something meaningful for my kids that will hopefully stand the test of time.

I invest in companies that my children recognize and interact with, such as Australia’s largest bank and supermarket. For my children, I prefer individual stocks to managed funds because they represent tangible companies that are easier for them to understand and relate to.

While ETFs and managed funds are an essential part of my own diversified investment strategy, my focus for my children is on promoting both financial literacy and investment growth. This approach helps them understand the basics of investing.

I want to make investing recognizable, arouse their interest, teach them from an early age how companies work and involve them in the process.

I was not raised with financial literacy. My parents didn’t actively teach me, but they did teach me basic concepts like “Don’t spend more than you earn” and “Interest works while you sleep.” My knowledge about investing accelerated while I worked as a financial journalist.

I opened a stock account for my children when they were born and linked my bank to a stock trading account to manage their investments. This allows me to purchase shares directly on their behalf.

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I focus on profitable companies with strong financials, consistent growth and a proven track record. I also like to diversify between sectors. I don’t want my children to end up in just one sector that I think is good. I have invested in the consumer goods, technology and healthcare sectors to reduce risk.

Being a very active investor myself, I am constantly researching and reading company reports.

I print a booklet that says “my investment” for them and make a stock certificate that looks like something you might have gotten 100 years ago.

I also make drawings for them to accompany the investment, such as of a supermarket or pizzeria. Visualizing them is my commitment to their learning and making money tangible.

I’m in the process of creating a book called ‘The ABCs of the ASX’, which will explain major companies to children so they can understand investing.

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We will hand over the portfolio to the children when I am confident that it will be managed with as much care as it has been set up.

My children have never complained about the investment gift. Fortunately, Santa Claus provides ‘exciting’ toys at Christmas, so investing is considered an extra.

My son started asking me, “How do I get this money?” and “How can I invest more myself?” This raises the issue of work and we discuss what work is and how to make money.

For a child, the idea of ​​ownership is wonderful. When we go into a supermarket, we talk about spending our money in a place where we have an investment. I think it improved his worldview at a very young age.

My clearest message is that investing can be very simple if you focus on the basics.

Investing through trusted institutions and choosing quality, profitable companies can simplify a very overwhelming process, even for adults.

Read the original article on Business Insider