What's the opportunity cost of buying kids toys instead of investing for their future?
Let me start by saying my nephew is a smart and mature 10 years old. Last year i sat him down after giving him his first ounce of silver and attempted to explain the value of precious metals. surprisingly he took to this train of thought very well and was very open to it.
I started out by giving him some silver; with a puzzled look on his face he turned to me and asked 'what does it do?', it holds value i said with a cheeky smile on my face. i likened his newly obtained metal to valuable pirates treasure and started asking him questions about the last couple of presents that i had got for him for Christmas and for his birthday. He struggled to name the last couple of presents and once i reminded him of them and asked where they are now and how often he uses them he; he conceded that they are in the back room and are not being used.
I reminded him of earlier presents which are also not in use anymore and explained the value of these toys is limited and that it might be fun for a few weeks but by the time the next year rolls around he has moved on to other things of interest.
I continued to explain that his silver will not do anything but look pretty and retain some value.. when he is older they will have 'X' value; and he can use this to buy something meaningful. His eyes shot opened and excitedly he asked 'A Car?'.. yes i said; you can definitely put it towards a car, a house, a boat what ever you like.. the thing is, this is like money but you won't accidentally spend it on lollies and it may get a lot more valuable over time.
Sold!. in his mind he was getting a car...; i felt bad, so i reminded him that he will need a lot of these silver coins to buy a car and that if he likes i would buy him silver and gold for his birthday and Christmas instead of toys; i reminded him that on his birthday and Christmas he has many toys from all his other family and that 1 less toy would not be a big loss.
From that point on i have been buying him Silver, not sure if he considers me the boring uncle; but one day i think he will fully appreciate what i have done for him and in the mean time the cost of 1 less present is not a deal breaker.
Also with the economy in the state it is i think holding a little bit of gold and silver is a good idea.
His Birthday present this year
This time i opt'd to get him some pirate themed coins which i think he will enjoy for their rustic appearance. There are 2 coins and each is 2 ounce of .999 fine Silver. The face of 1 is the Kraken and the other is a pioneer/pirate the back of each coin is a skull and cross bones with the text 'No Prey, No Pay'.
What if someone bought me Gold or Silver when i was growing up?
Interested in what might have been if my uncle has invested my presents in gold for my life looked back at historic gold and silver charts to derive the price of metals and through inflation adjusted figures i estimated what value i might have amassed over a 34 year time-span. my uncle does not buy me presents any more but i was on a roll so i just collected all figures and i will display them in a table below.
How i came to these numbers
i used a Conservative value of $50 for a present in 2016 which adjusting for CPI inflation worked out to about $20 in 1982; i then derived an average value based on the time-span and these number as the extremes. The resulting value was multiplied by 2 to represent birthday and Christmas for the given year.
I calculated the price of metals for each year in June/July and used that figure to derive the amount of ounces of precious metals for that year.
Results
| Year | Currency Spent | Price of Gold | Ounces of Gold | Gold Sum | Sum Gold Worth | Price of Silver | Oz Silver | Silver Sum | Sum Silver Worth |
|---|---|---|---|---|---|---|---|---|---|
| 1982 | $40.00 | $296.00 | 0.14 | 0.14 | $40.00 | $6.08 | 6.58 | 6.58 | $40.00 |
| 1983 | $41.82 | $403.00 | 0.10 | 0.24 | $96.28 | $11.64 | 3.59 | 10.17 | $118.40 |
| 1984 | $43.64 | $350.00 | 0.12 | 0.36 | $127.25 | $8.07 | 5.41 | 15.58 | $125.72 |
| 1985 | $45.45 | $310.00 | 0.15 | 0.51 | $158.16 | $6.04 | 7.53 | 23.10 | $139.55 |
| 1986 | $47.27 | $339.00 | 0.14 | 0.65 | $220.23 | $5.06 | 9.34 | 32.45 | $164.18 |
| 1987 | $49.09 | $452.00 | 0.11 | 0.76 | $342.73 | $7.63 | 6.43 | 38.88 | $296.66 |
| 1988 | $50.91 | $443.00 | 0.11 | 0.87 | $386.82 | $6.71 | 7.59 | 46.47 | $311.80 |
| 1989 | $52.73 | $374.00 | 0.14 | 1.01 | $379.30 | $5.23 | 10.08 | 56.55 | $295.75 |
| 1990 | $54.55 | $360.00 | 0.15 | 1.17 | $419.64 | $4.83 | 11.29 | 67.84 | $327.68 |
| 1991 | $56.36 | $367.00 | 0.15 | 1.32 | $484.17 | $4.34 | 12.99 | 80.83 | $350.80 |
| 1992 | $58.18 | $339.00 | 0.17 | 1.49 | $505.41 | $3.95 | 14.73 | 95.56 | $377.46 |
| 1993 | $60.00 | $379.00 | 0.16 | 1.65 | $625.05 | $4.55 | 13.19 | 108.75 | $494.79 |
| 1994 | $61.82 | $383.00 | 0.16 | 1.81 | $693.46 | $5.32 | 11.62 | 120.37 | $640.35 |
| 1995 | $63.64 | $389.00 | 0.16 | 1.97 | $767.96 | $5.12 | 12.43 | 132.79 | $679.91 |
| 1996 | $65.45 | $385.00 | 0.17 | 2.14 | $825.52 | $5.11 | 12.81 | 145.60 | $744.04 |
| 1997 | $67.27 | $344.00 | 0.20 | 2.34 | $804.88 | $4.73 | 14.22 | 159.83 | $755.98 |
| 1998 | $69.09 | $293.00 | 0.24 | 2.58 | $754.64 | $5.36 | 12.89 | 172.72 | $925.76 |
| 1999 | $70.91 | $258.00 | 0.27 | 2.85 | $735.41 | $5.02 | 14.13 | 186.84 | $937.95 |
| 2000 | $72.73 | $282.00 | 0.26 | 3.11 | $876.54 | $4.98 | 14.60 | 201.45 | $1,003.20 |
| 2001 | $74.55 | $272.00 | 0.27 | 3.38 | $920.01 | $4.38 | 17.02 | 218.47 | $956.88 |
| 2002 | $76.36 | $326.00 | 0.23 | 3.62 | $1,179.02 | $5.10 | 14.97 | 233.44 | $1,190.54 |
| 2003 | $78.18 | $347.00 | 0.23 | 3.84 | $1,333.15 | $4.50 | 17.37 | 250.81 | $1,128.66 |
| 2004 | $80.00 | $391.00 | 0.20 | 4.05 | $1,582.19 | $5.82 | 13.75 | 264.56 | $1,539.73 |
| 2005 | $81.82 | $419.00 | 0.20 | 4.24 | $1,777.31 | $7.33 | 11.16 | 275.72 | $2,021.03 |
| 2006 | $83.64 | $583.00 | 0.14 | 4.39 | $2,556.60 | $12.26 | 6.82 | 282.54 | $3,463.97 |
| 2007 | $85.45 | $655.00 | 0.13 | 4.52 | $2,957.80 | $13.11 | 6.52 | 289.06 | $3,789.58 |
| 2008 | $87.27 | $891.00 | 0.10 | 4.61 | $4,110.78 | $18.09 | 4.82 | 293.88 | $5,316.37 |
| 2009 | $89.09 | $961.00 | 0.09 | 4.71 | $4,522.83 | $15.94 | 5.59 | 299.47 | $4,773.61 |
| 2010 | $90.91 | $1,242.00 | 0.07 | 4.78 | $5,936.23 | $18.59 | 4.89 | 304.36 | $5,658.13 |
| 2011 | $92.73 | $1,542.00 | 0.06 | 4.84 | $7,462.83 | $37.42 | 2.48 | 306.84 | $11,482.03 |
| 2012 | $94.55 | $1,621.00 | 0.06 | 4.90 | $7,939.71 | $28.24 | 3.35 | 310.19 | $8,759.77 |
| 2013 | $96.36 | $1,411.00 | 0.07 | 4.97 | $7,007.49 | $22.72 | 4.24 | 314.43 | $7,143.88 |
| 2014 | $98.18 | $1,314.00 | 0.07 | 5.04 | $6,623.93 | $20.65 | 4.75 | 319.19 | $6,591.19 |
| 2015 | $100.00 | $1,172.00 | 0.09 | 5.13 | $6,008.11 | $15.73 | 6.36 | 325.54 | $5,120.79 |
| 2016 | $102.00 | $1,244.00 | 0.08 | 5.21 | $6,479.20 | $16.43 | 6.21 | 331.75 | $5,450.67 |
| Total Fiat: | $2,482.00 | Total Ounces Gold: | 5.21 | Total Gold Worth : | $6,479.20 | Total Ounces Silver: | 331.75 | Total Silver Worth: | $5,450.67 |
Conclusion
Interestingly if i cut the calculations off in the year 1999 at age 17 the fiat amount is actually higher than both gold and silver; with Fiat coming out on top and gold in last place. Although in saying that gold and silver are inherently harder to spend than fiat so the likelihood of their value actual standing the test of time would be a lot higher than fiat handed over in a card.
Figures from 1982 - 1999 based on inflation adjusted $100 (2016) per year
| Total Fiat | Total Gold | Total Gold Worth | Total Silver | Total Silver Worth |
|---|---|---|---|---|
| $998.18 | 2.85 | $735.41 | 186.84 | $937.95 |
Figures from 1982 - 2016 based on inflation adjusted $100 (2016) per year
| Total Fiat | Total Gold | Total Gold Worth | Total Silver | Total Silver Worth |
|---|---|---|---|---|
| $2,482.00 | 5.21 | $6,479.20 | 331.75 | $5,450.67 |
The figures above shows that the state of the economy makes a large difference in profitability of your investment with the last 16 years showing massive growth in both the gold and silver price based on uncertainty in financial institutions and markets. with Both Gold and Silver values being worth more than twice as much as the value of the fiat currency used to purchase it.
Although what ever the case may be i stand by my decision to purchase precious metals for him instead of toys as at least it will be useful for him in the future no matter the retained value in comparison to the value expended to purchase the precious metals initially. one thing is for sure the resale value of the metals he is collecting will far out weight the value of 10 more years of toys.
I also plan to introduce him to bitcoin and other digital currencies in a few more years and his collection of precious metals will be building a solid foundation for him to see the value of digital gold.
I gave my younger sister a silver eagle for her birthday too!
:D
Seems like an awesome time to get hold of some PM these days so hope shes keeping it in a safe place.
I plan on getting Silver Eagles (or something similar) for my extended family this Christmas.
At his age, I yearned for this type of knowledge and it is something he will always remember. I'm not surprised. What I am surprised, is that most other adults don't teach our young kids important things. We let the public education system do it, and that's why we end up with a bunch of dopes.
That's a horrible gruesome statement I just made, calling kids "dopes", but I did it for effect, and to make people think. How true is that statement? 25% true? 50% true?
Our next generation will be what we create and guide in THIS generation, and they will be the ones to curate the world we leave them. It is very important we teach them what the public education system does not. :)
Great job @steempower - very nice. Following you too today.
Appreciate it man; well stated. As you said we cannot trust the public education system to teach them anything of real value, especially not related to anything that will undermine the strength of the fiat system; i am from Australia and officially our governments stance on gold is it is a risky investment.... what! mean while.. just keep the print press running.
happy to say this little guy is pretty good and well mannered too :)
Amazing!! I have a couple gold coins given to me from a family friend, many many moons ago. I haven't even checked what types of coins they were, all I remember we're that they we're real gold coins, but very old. I know where they are, but I have to travel pretty far. But, it's a good excuse to do so. lol thank you for sharing! Love the Pirate embossing!
The could be worth a fortune. I know some African gold coins are high value not only for the gold content but the symbolic value as well. Gold luck man :)
This is what I did for graduation presents as well, good choice!
Nice :) not sure if i can put it in for easter as well i think he is probably likes the chocolate. But i think the graduation is a good idea and given it is not so frequent could probably go for a large bar 1/2 - 1 kg :) or smaller gold coin
Interesting post. We need to start early teaching our children about finances and money and it shouldn't be a hush hush subject as I felt it was when I was growing up.
Agreed. These days you can just load them up with a boot load of cheap cryptos and send them to school. Like futuristic basketball/baseball cards.
Great article! Really awesome of you to take the time and ELI5 the whole concept to a 10 year old, I am sure it will leave an affect on him about value and he will remember it growing up.
I have lately started giving out these coins as presents to friends and relatives:
They are goldplated coins from the website: www.denarium.com, which I found on the website bittiraha.fi which is one of the few Finnish websites that assists with buying and selling bitcoin.
I purchased some in a bulk, put in some bitcoin in them and gave them out as gifts telling the persons that it sort of has a double value to it and most of them understood the gesture and appreciated the gift, even though they didn't know much about bitcoin.
For those that don't know this is an image from their website:
The coin has a hologram in the back with a visible public address to your wallet and if you want to access those funds at any time you just remove it and read the backside.
Anyway, in case you need a cool gift idea, I'm sure you can find more of these bitcoin coins locally. Wish there was a place to order them with other coins wallets, maybe even Steemit accounts? ;)
ELI10 ;)
Thanks heaps for the tip man this looks really cool; might be able to start him off now and then let him know where to find the secret later on; will definitely check it out :)
$#it, it BETTER have a tracker on them! lol
Yes, but how much would you pay to go back in time and play with the things you wanted to play but instead you had all these gold bars around you :-).
Wealthy is one thing and a lost youth another. I would opt for a balance. My grandfather always paid in money on my account so when I was an adult I had quite some money to invest while my grandma bought me toys and we played together. What do I remember most? The money on my account or the time spent playing with my grandma?
@steempowerwhale 🐳
🌞 upvoting your lifetime dreams!
Agreed; but all the rest of his family are giving him toys so he is not missing out; it is only me, and we struck a mutual agreement. but i understand you concerns
Awesome post @steempower!
Unfortunately for me I had to learn about the value of the coin the hard way because I did not have a father in my life and I had to grow up very fast.
Your child is very lucky to have you in his life!
If I will be blessed with a child I will try my very best to teach him all that I know about currencies and crypto coins and of course life in general.
I did the same to my nephew and cursing also
Gold coins are the best. Can be sell for gold's weight or the coin value. Love them.
I gave my Godson silver as Well but not sure if he knew what it was.
Must give him some more.
This is what we learn to do for our children for benefit of their future. As they grow up they will be able to start to make profit. It is good post, thank you very much.
I think it's great that you invest in his future. I think specific toys are good for children because it can help with imagination to to create in this world. We invested in a lot of people that have imagined ideas that are some of the top businesses today.
ha ha, it seems like precious metal bugs follow a similar train of thought, i bought my brother(adult) 3 silver 1oz coins, a month later he expressed his gratitude by telling me that he heard on the news that it had appreciated more than most commodities by june of this year, i don't think he'll buy any of his own volition but he will be happy to see it appreciate in price i am sure
That is a wonderful idea, my daughter was just born this year. i want to jump start on her savings/investment. Going to buy 100 ounces of silver the first year and 25 ounces every year after that.
This exactly why i have no silver or gold. Bad investments. But i know you just tryong to teach your son something. Those are really cool coins but get him a bitcoin. Let it pay for his studies later. Seriouly listen to me, you will thank yourself when he is a teen and needs more school money and when he is out of school.
I wish I was able to start stacking gold and silver when I was younger. I unfortunately was not able to get into stacking precious metals until my later years. I can only imagine how large my precious metal collection would be if I had known and started earlier. Also, I recommend diversifying with Platinum and Palladium. Palladium isn't known very well but I do enjoy having other metals besides gold and silver.