5 Safe Stocks That You Can Leave To Your Children

Safe Stocks That You Can Leave To Your Children: When you spend a lifetime building your wealth, you don’t want that work to go to waste. Your goal is to leave your children with a sense of financial security. Perhaps your efforts will help them avoid some of the challenges you faced. They can retire student loan debt, afford a safe, comfortable home, and give their own children – your grandchildren – support as they get their education, start their careers, and build families of their own. 

The problem is that passing wealth from one generation to the next isn’t as straightforward as having your estate write a check. Without careful planning, a large portion of your estate will go to taxes. The amount that remains could be lost to poor investment choices – or no investment choices at all. The latter results in declining buying power as inflation gradually chips away at the dollar’s value. 

A far better solution is to create a deliberate plan for transferring your wealth to your heirs. Within that plan, create a portfolio of reliable investments that can be counted on to deliver steady growth for decades to come. These are potentially five safe stocks that you can leave to your children with complete peace of mind. 

Berkshire Hathaway

Warren Buffett’s Berkshire Hathaway (BRK.B) is the gold standard for stocks that deliver reliable returns. Since Buffett took control of the company in 1965, shares have averaged gains of roughly 20 percent per year.

The S&P 500 only returned around 10.2 percent per year during that same period, demonstrating Buffett’s special gift for selecting investments. 

Berkshire Hathaway doesn’t include fads and trends in its portfolio. Instead, the company focuses on industry-leading businesses that can be purchased at value prices.

More than three-quarters of Berkshire Hathaway’s capital is invested in three industries: technology, consumer staples, and financial services.

However, he does find space for other companies with a flair for innovation. For example, he has shares in high-quality pharmaceutical stocks, and until the market crash of 2020, Berkshire Hathaway invested in airlines. 

Shares of Berkshire Hathaway are a smart choice for protecting wealth long-term. Returns have a history of exceeding the larger market, and the company’s leaders are often considered among the most talented investors in history.  

Amazon

When Amazon launched its small online bookstore in 1995, ecommerce was a novelty. Most believed it would serve a niche demographic, but it would never go mainstream. Clearly, those naysayers could not have been more wrong.

Today, Amazon is one of the largest companies in the world with a market cap of more than $1.6 trillion. Anyone who had the foresight – or the good luck – to invest around the time of Amazon’s 1997 IPO has enjoyed growth that tops 120,000 percent as of May 2020. 

Amazon (AMZN) grew to its current size because it thought beyond books. The company expanded its product lines, eventually opening its platform up to merchants from all over the world. However, the company didn’t stop there.

Amazon has since expanded into cloud computing – and because it was first in this space, it holds the largest share of the market. In fact, Amazon Web Services owns more of the market than its next two closest competitors – Microsoft (MSFT) and Google (GOOG) – combined. 

In addition to ecommerce and cloud computing, Amazon has a popular digital streaming service, and it is well into research and development for new artificial intelligence (AI) applications.

All of that is to say that Amazon is a smart investment – particularly if you want shares that will last for decades. Amazon is dedicated to innovation, and there is every reason to believe it will drive the technologies of the future. 

Microsoft

Many consider Bill Gates to be the force that moved the world away from typewriters and carbon paper and into an alternate digital universe. Sure, he had help with taking computers mainstream  – most notably from competitors like Steve Jobs’ Apple – but Gates was the first to envision the digital lifestyle we enjoy today. 

Gates founded Microsoft in 1975 to develop and produce computers and related software. The Windows operating platform is the most popular in the world – by far – and Microsoft holds more than 75 percent of the related market share.

Microsoft held its IPO in 1986 when its market cap was just $700 million. Today, the company is valued at $1.87 trillion, and shares have returned an average of 25 percent per year. Those who invested in 1986 have realized a cumulative return of almost 211,000 percent. 

The company isn’t finished growing. It is holding on to its leadership position in many areas of the software market. It continues to produce faster, more reliable hardware, and its users are exceptionally loyal. 

In addition to that, Microsoft is staying on top of critical technological advancements. It offers a popular cloud computing platform, and its innovation center is working on everything from faster, more reliable storage, data centers, and networking to integrating art with technology. 

Clearly, Microsoft has a place in creating the technology of the future, and that makes this a safe stock that you can leave to your children without reservation. 

Procter & Gamble

International brands like Pampers, Tide, Charmin, Tampax, Gillette, Cascade, Crest, and Ivory all have something in common. They belong to the Procter & Gamble family.

This massive company has a market cap of $337.88 billion, and it is a member of the elite Dividend Aristocrat club. Procter & Gamble (PG) has paid dividends to shareholders for a remarkable 130 years, and it has increased dividends for 65 consecutive years. 

When it comes to reliability, stocks don’t get much more dependable than Procter & Gamble. That’s probably because it’s in an industry that doesn’t suffer when the economy tanks.

No matter what the larger market is doing, people still need personal care and cleaning products, and they tend to be very loyal to their favorite brands. In other words, Procter & Gamble is a buy if you want stocks that will deliver value for decades to come. 

Square

Most of the companies on this list went public well before the dawn of the 21st century. Square is the one exception. It was founded in 2009, and it didn’t hold its IPO until 2015. However, in this case, its lack of history doesn’t preclude it from being an enduring stock. 

Square has revolutionized how funds are exchanged between consumers and merchants and peer-to-peer. The company has taken digital payments to the masses, creating a platform that promises to bring microbusinesses from all corners of the globe into the world of ecommerce.

That’s big, because digital payments are rapidly catching up to traditional payments – e.g., cash. Most industry experts believe it won’t be long before digital payments make up the majority of the world’s transactions. 

With that in mind, Square is clearly an important addition to any portfolio that is intended to stand the test of time. Square is on the cutting edge of payment technology, which means it is likely to continue on its growth trajectory. 

Safe Stocks You Can Leave To Your Children: The Bottom Line 

Protecting your wealth by investing wisely is not an unusual goal, but how to execute on that goal isn’t always obvious. Some of the fastest-growing companies – the ones that make headlines every day – aren’t necessarily the best choice for safe stocks that you can leave to your children. They may turn out to deliver substantial returns, but those potential rewards come with high risk. 

The five on this list offer above-average earnings for shareholders, but they don’t come with an excessive amount of risk. They have proven their ability to grow and adapt over time without missteps that negatively impact investors.  

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.