BUYING STOCKS AS A GIFT FOR KIDS
Most of the people who want to buy stocks as a gift want to do it for their own children. Occasionally you might find Grandparents who want to buy stocks for their grand kids as a Christmas or birthday gift. So, what is the best way to go about giving company stock as a gift? There are 3 main ways:
1) If you want to buy just one share of stock you can go to OneShare.com. This is more for the novelty of having a framed share of stock of a company you like or might think is cool. Often times the certificate fee of $39.00 is more than the price of the stock you buy so this option is NOT for real investors. You can then pay even more on framing and other options to make this a fun gift but not a practical one. There are more than a hundred companies to choose from and the most popular ones are usually Disney and Harley-Davidson. The stocks certificates are often interesting or pretty and look good in frames so they are great for collectors too.
2) When I was very young, my Uncle bought me 100 shares of Detroit Edison and he went straight to the company to do it. It didn’t mean anything to me at that time and I wasn’t even old enough to understand what stock was or what a company was. But when it came time that I needed money and wanted to cash those shares in, I was appreciative of the gift.
You can buy stock directly from many companies and the best way to find out if the company you are interested in allows you to do that is to pick up the phone. and call them. You might also go on the Internet to each companies website but that information is rarely available online.
Buying stock directly from a company will mean they send you the actual stock certificates and it is up to you to guard them. They are like cash and if you lose them or they get burned in a fire they are gone. They are also more of a hassle to redeem and I remember I had to go through my broker to do it with a lot more steps involved than if I had owned the shares through them.
3) If you have a young child and want to give them a gift of stock to introduce them to the world of stock investing, the way I would do it is to open up an online account in their name. My parents opened up an account for me when I was a small child and I will do that for my children as well. All you need is their social security number and you can even make is so that you (the parent) has control over the account.
My parents didn’t tell me I had that account so they opened it up because they wanted to transfer money to me through gifting. Some parents though, would want to open an account as an instructional tool for them to teach their children about stocks and the complexities of investing. No matter what your reason is, it is never too early to open up an online stock account and start buying stocks for your kids.
If you open up an online stock account for your child, you can buy them the gift of stocks any time you want and it becomes very simple. Additionally, you can use it to teach them about the market and they can even put in their own money and pick their own stocks if you let them. When they get $100 from Grandma they can, if they choose, put it in their account and hopefully watch it grow. They can see their balance online at any time which is fun for them and it is a perk that kids have today that they didn’t have before the Internet. It can be a fun learning experience for you and your child that will serve them well when they get older.
