In a recent , which in turn referenced an older , Mary Buffett shared an anecdote about how her former father-in-law Warren Buffett changed the way he gifted his family $10,000 every year, from cash to shares of stock:
He would always give each of us $10,000 in hundred-dollar bills. As soon as we got home, we’d spend it — whooo! Then, one Christmas there was an envelope with a letter from him. Instead of cash, he’d given us $10,000 worth of shares in a company he’d recently bought, a trust Coca-Cola had. He said to either cash them in or keep them. I thought, “Well, [this stock] is worth more than $10,000. So I kept it, and it kept going up. Then, every year when he’d give us stock — Wells Fargo being one of them — I would just buy more of it because I knew it was going to go up.
Giving shares of stock instead of cash was small nudge that made a difference. A little bit of added friction. A little hint from the giver that you might want to keep it, but you aren’t forced to keep it.
I haven’t given my children any stock yet, but am starting to think they are ready. It won’t be a lot, but I’ll tell them about it and they can look at the custodial account statements each year. I’ll show them what paper stock certificates look like. I’m hoping that they’ll also see the growth from the investment, and then that’ll make them even less likely to sell the shares. But they’ll technically be free to sell them once they turn 18 (or up to 25 in some states).
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