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What to give a newborn niece?

Baby niece – what to buy her?

I am a proud uncle again. Or rather, I’m more of an uncle than I was.

I’m uncle-ier!

What I mean to say is my sister has had a beautiful daughter, and my brother already has a splendid son.

Besides being a source of much needed happiness in our family, the arrival of Niece #1 raises an issue I never resolved with Nephew #1 – whether and what to give them to mark the occasion.

Being childless myself it’s news to me, but apparently there’s a tradition of buying newborn children presents they’ll look forward to getting when they’re older.

The fact I don’t remember getting any such present when I was 18 (though I had many nice presents along the way, I stress) makes me wonder if this ‘tradition’ is actually something being foisted upon us by the people who brought us £30 Easter eggs and turned Valentine’s Day into a willy-waving contest (not literally. Well, not always.)

On the other hand, who wouldn’t want to give a present to a splendid little person at the start of their lives?

Time on her side

My niece, like all young people is already rich.

Okay, she’ll need to grow into her looks, having the appearance at the moment of an utterly gorgeous, yet wrinkly and frighteningly tiny Winston Churchill.

But there’s plenty of time for that, and also time for any investment that she (or rather her shrewd uncle) makes to grow, too.

Here in the UK, all newborn children get £250 from the State, which is enrolled in a Child Trust Fund (CTF).

She’ll get another £250 when she’s seven, just for simply growing up.

Nice work if you can get it, Niece #1!

Depending on how her parents invest the money and whether the fund is topped up by them or other family members, she could end up with a tidy sum when she’s 18.

That said, she’ll probably need the money, too, with the cost of going to university perpetually rising, not to mention our stubbornly silly house prices requiring young people to save ever larger deposits.

So one option is to put some money into the Child Trust Fund, and maybe ask her parents if they’d like some help deciding how to invest it.

On the other hand, will a financial statement cause a tear come to her eye when she’s 18? Isn’t it a bit impersonal?

Here are some of the ideas I’ve been knocking around.

Money

My sister isn’t wealthy, and I know she could use the cash with a new baby. But any amount I would give her would soon be swallowed up by the household budget, so there would be no trace of the gift in years to come. Anyway, I’m hardly wealthy myself. Cash was my first thought but I’ve now ruled it out.

Clothes

While I’ve been pondering what to do, my girlfriend has already sent down some excellent little clothes she picked up at bargain prices while traveling in Eastern Europe (don’t worry — up to European safety standards!)

I have a hunch Niece #1 will outgrow them, however. Also, I  hate shopping. Sometimes people buy babies clothes as an excuse to shop, I suspect. Bah humbug.

A musical instrument

I wondered about giving her something like a violin that she could know was there and look forward to learning. Obvious drawbacks are the high initial cost, and that she might not want to learn the violin. It could get damaged in the meantime, too.

Jewelry

A few people have suggested a classic piece of jewelry, like a simple gold chain. Alternatively (and more fun and worthwhile in my eyes) I could buy a little antique piece. This concept has some merit in theory, but in practice I find people rarely like jewelry that’s bought for them as much as they like something they choose for themselves.

Some plastic tat marketed at kids

I ruled this out immediately. There’s enough rubbish going into landfills.

Premium bonds

These are a UK Government-run monthly lottery, where you might win a million pounds, or else a variety of smaller prizes. Any winnings are tax-free. They used to be very popular and indeed were a key part of the Government’s debt-raising activities, but last time I looked the expected rate of return was very poor compared to even a cash savings account. And gambling is not a good lesson to teach Niece #1.

Shares in certificate form

I like the idea of giving her 50 shares in, say, a Real Estate Investment Trust, that she could hang on the wall and watch grow over the years. It could spark a passion for investing (and let’s face it, I need more readers).

Holding a single share is risky, however. The paper certificate might not have such sentimental appeal if it’s worthless when she’s 18…

A risky but diversified investment

She’s got at least an 18-year investing horizon. It’s tempting on that timescale to put some money into emerging markets or a tech fund or something similarly volatile, and let it ride out the ups and downs over nearly two decades, especially as I believe markets are still pretty good value right now.

The result could be an excellent return on my initial investment, and more money for her to spend on an 18th birthday bash I’ll be too old and uncool to be invited to put towards a house deposit. And if I choose an interesting asset, we could talk about it as she gets older.

Investing via the Child Trust Fund

This is probably the most sensible idea. The money would grow tax free, and it’d be put together with her parents’ and the Government’s money so there would be no potential awkwardness about the sums involved.

On the other hand, I’d want to put it into shares, whereas her parents may prefer the safety of cash. Worse, if I convinced them to go for shares and the markets went nowhere…

Whole world in her hands

Regular readers will probably see I’m out of my comfort zone here. And nobody will be surprised to hear I haven’t made my mind up yet.

Reading back over what I’ve written, it seems the gift should be:

  • Interesting
  • Educational
  • Able to benefit from compounding over time
  • Personal from me to her

At the moment, I think I’m leaning towards buying some shares in the Templeton Emerging Market Investment Trust in paper certificate form.

She can hang the certificate on the wall, and when she’s grown up and India, Brazil and China are the new superpowers, she can tell her friends she owns a piece of them.

Am I being too money-focused? Should I just buy her a stuffed elephant? Have you ever bought a good gift for a newborn? Any comments appreciated!

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{ 10 comments… add one }
  • 1 Mike Piper September 7, 2009, 5:50 pm

    Eh…I’m the same way. Every time, my gift is a check for a 529 contribution. (529 plans being the US version of college savings accounts.)

  • 2 FB @ FabulouslyBroke.com September 7, 2009, 6:13 pm

    I am with you on giving money and something that is able to benefit from compounding over time.

    I wouldn’t give clothes, toys or anything else, because cute little kids will get SPOILED ROTTEN from everyone else they meet. Even strangers.

    When I was 18, I wished someone had bought me bonds for my first and subsequent birthdays instead of toys 😛

  • 3 The Investor September 8, 2009, 8:43 am

    Oh dear guys, maybe we should form some sort of support group! 🙂

  • 4 Neal@wealthpilgrim.com September 8, 2009, 1:41 pm

    While I agree that cute kids get spoiled rotten, I would risk it and go for the clothes.

    WHY?

    1. Practicle. Even babies must wear clothes at some point.
    2. You benefit by seeing your gift-dollars at work.
    3. The child gets positive reinforcement by in fact, looking cute – at least when she is wearing your gift.

    Forget toys – she doesn’t need anything. When that baby sees everyone going ga-ga over her in that cute little outfit, it’ll boost her self-esteem and that can pay much greater dividends than a bond or mutual fund.

    Eh?

  • 5 Nicola September 10, 2009, 8:11 pm

    I bought my eleven month-old nephew shares in an index fund that tracks the Australian sharemarket when he was born, and I’m adding $NZ 1000 (£420) each year on his birthday. We’re New Zealanders, but I couldn’t in all conscience buy him a fund that tracked the New Zealand sharemarket, so I compromised on Australia. I think it’ll have accrued a tidy sum by the time he turns 18.

  • 6 The Investor September 10, 2009, 9:11 pm

    As an aside, apparently Australia has great fundamentals for the long-term, which is currently being reflected in the strength of the Aussie dollar (though to my untrained eye it always seems to go up and down in cycles). English speaking population on the doorstep of Asia with a lot of space and bags of natural resources – you can see where they’re coming from! Climate change could be a problem though.

    Thanks for the thoughts guys.

  • 7 Christopher Delaney October 1, 2009, 12:19 pm

    I have found myself in the same position as yourself, however I was wondering if you knew of anyway of investing money for my neice in some form of shares but with only making a contribution of around £100 once a year?

  • 8 The Investor October 1, 2009, 3:58 pm

    @Christopher — I believe some investment trust saving schemes allow very low monthly payments, though I don’t know if they’d go as low as £10 a month. Another possibility would be something like a Halifax Sharebuilder account, where you could invest £100 once a year and buy the FTSE 100 tracker (code ISF) for £1.50 using the Sharebuilder dealing option.

    I’m not familiar with opening the investment in someone else’s name however, so you’d have to ask the suppliers how to do it. You’d also not be taking advantage of the Child Trust fund tax advantages.

    I have veered towards Child Trust funds again, so hopefully I’ll look into them soon. *Surely* they are set up to allow low-ish ad hoc payments from friends/relatives…?

  • 9 Adam September 30, 2010, 6:40 pm

    I always buy a big stuffed animal. One of my niece is 4 years old and she’s still sleeping with the big stuffed husky dog 🙂

  • 10 Minikins July 12, 2015, 2:47 pm

    I am interested to know what you actually did get your little niece all those years ago, (and when you were hardly wealthy ; ) )
    Babies seem to be everywhere at the moment, or maybe that’s just me with my highly attuned baby radar. So this is a common conundrum for many at the moment. Much as I love babies, I’m definitely not having any more but I do enjoy the gift giving bit for other’s new babies. It’s particularly nice when the parents tell you that the little floppy giraffe you gave their baby is the only thing he/she can sleep with or the bunny blanket is now their “huggy blanky” or, slightly worse, their “sucky blanky”. Anyway, you can’t suck on a CTF, well, not until you’re 18, and they are pretty much a dud investment since JISAs arrived. How about an original work of art that can hang on the wall (away from the changing table), influence their developing creative neural networks, be a backdrop to memories and maybe even increase in value too?

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