A Mom Asks About Gifting Her Teenager A Gift That Keeps on Giving
Today’s article is about a question from a mother.
Hi Ms Rose!
My husband and I thought of “gifting” our son with his first UITF account. He is turning 14, and we thought this was better than a gadget, something he could learn hands-on from. Maybe start with 10k po.
A bit more context, we are not a gifting family. The last time we gifted him was a PC which was for his graduation with honors.
I hope it’s ok to ask for your thoughts. Thank you and more power educating! ❤️
Portia via IG DM
My reply:
Dear Portia,
Happy 14th birthday to your son! I love receiving letters like yours because it shows how parents are actively looking for ways to equip their children with Economic Self-Defense, i.e., a high FQ.
You mentioned that your family is not big on gifting, and that the last gift you gave was a PC when he graduated with honors. That detail tells me that your family values utility, effort, and long-term impact over temporary material gratification.
To answer your question directly: Yes, gifting him his first UITF (Unit Investment Trust Fund) account with Php10,000 is a wonderful, high-FQ idea!
However, before you run to the bank, let us pause and discuss a few Behavioral Economics and FQ principles to ensure this gift turns into a lifelong high FQ habit, rather than a forgotten bank document.
1. Since he is not yet of legal age, you will need to open an ITF account (In Trust For) in your or your husband’s name ITF your son’s name. Take him along to sign the forms. Explain this concept to him, and when he turns 18, convert it into an individual account under his name as part of his 18th birthday rituals that will make him more aware of his maturity.
2. Decide whether you want to start him off with UITF or MF (Mutual Fund). They are very similar pooled funds that collect money from many investors to buy a diversified portfolio. The main difference is who manages them: UITFs are managed by bank trust departments, while MFs are managed by investment companies. With online platforms like COL Fund Source, you can access almost all mutual funds in the country in one place and easily link your bank account for auto-investing via their EIP (Easy Investment Program), whereas bank UITFs typically require staying within that specific bank’s ecosystem. Pick the one that is more convenient for you. Sustained implementation is key.
3. Once you’ve decided on the above, pick the funds that you will initially invest in. Since your intention is to start off his investing habit and not to build his emergency fund (which is what working adults should prioritize), a fun starter portfolio rule of thumb is matching his age: 14% in fixed-income funds (e.g., bonds) and 86% in equities (a mix of local and global index funds).
4. If you give your son a regular allowance, I suggest you also make him invest regularly in his investment account. Again, for easy recall, he can start saving and investing at least 14% of his regular allowance. Increase this rate together with his age. Do it in such a way that you automatically deposit this portion to his investment account using programs like the EIP (Easy Investment Program). This way, you are setting up a system that will make him observe ”Pay yourself first” using two very important behavioral biases in his favor. These are the Default Bias or Inertia (because it is automatically done, no need to think and decide each month or so) and the Endowment or IKEA Effect (because using his “own money” gives him skin in the game, making him value it more).
5. Show him the power of compounding. When I showed this to my sons while they were in grade school, it was an ah-ha moment for them, leaving a clear mark that in investing, time is of the essence. You can download this excel tool for free in my article: The Magic of Compounding: Explain to me as if I were a 7-year-old.
6. Make him create his High FQ Balance Sheet using the PC you gifted him for graduation. Nothing complicated, just a simple listing of his assets and liabilities. You can write to FQTeam@FQMom.com with the subject: High FQ FS to get your files for free. This FQ tool will make the abstract concept of money and investing more salient and tangible. It is something he can update and present to you at least once a quarter, enabling him to watch his investments grow while honing his presentation skills. This is definitely a tool to add more pogi points to his self-esteem from this day forward.
7. Investing at a young age will teach him how to calm his loss aversion and become part of the minority of people who save and invest automatically—like brushing their teeth—and not just as a result of financial emergencies, stress, or panic. I look forward to the day when your son will be among those who can proudly say what we discussed in last week’s article: The fact that I save even if I don’t need to is why I don’t have to. (Click The Privilege of “I Don’t Need To”)
8. When you present this gift, wrap it with a letter or a sit-down discussion about your family’s core values. (Check out my article What You Do With Your Money Should Agree With Your Core Values.)
9. While you’re at it, take the FQ Test (It comes in English and Tagalog.) together so he can record his starting FQ Score. After six months, he can take it again to see his progress.
I’m excited for you to have this wonderful experience with your teenager. Do give us feedback. Cheers to high FQ.
Sincerely,
Rose
This article is also published in Philstar.com
