If you ask parents what their kids want for Christmas, they’ll probably start with a long sigh, followed by, “Well… she really likes Ninjago and Dress Up.”
If you keep pushing, you’ll find that the parents are overwhelmed by the toys the child has, and they really aren’t that keen on giving their child even more junk plastic.
Enter the gift of stocks and investments. Giving kids a stock share is a fantastic way to relieve stress for parents, prepare a child for their financial future, and teach a few lessons along the way.
Also, as a millennial family, I’m tired of receiving all this junk. Think about it. Your child can receive up to 20 gifts each holiday season (mom, dad, siblings, grandparents, Santa Claus, etc.). But by mid-January they only play with 1-2 toys.
So, instead of wasting all that money on gifts (and then having a bunch of junk lying around the house), why not use that same money to invest in your child’s future. This is a great option for extended families who might want to give something as a gift.
If that’s you, then these are the best ways to give a kid a share in stocks, give gifts of investments, and even teach them financial literacy topics in a fun way!
If you want to give a kid a real share certificate (and make them an investor, too), check out GiveAShare. You can buy a framed share (which makes the perfect gift) and you become a shareholder too. Check out GiveAShare here >>
Promo: $10 free from backer ! Backer helps you invest in your kids’ future by helping you easily set up a 529 plan and allowing friends and family to “support” it by making gift contributions easy! You’d be surprised how many people are willing to support you and your family if you just ask them (especially in lieu of physical gifts).
Ask for a contribution to A 529
In my opinion, the best way to give kids stock is by contributing to their 529 or ABLE accounts. Many parents have invested a few hundred or a few thousand dollars in their children’s future, and they will appreciate every extra dollar that can be invested in their children.
If you plan to give thousands of dollars to a special child, you can set up a 529 account yourself and name the child as a beneficiary, but for most people that’s an overkill gift.
A more practical way to contribute to a 529 plan is to ask parents if they have one set up. If they respond positively, you can ask them to invest your $20 or $50 gift on your behalf. That sounds like a paltry gift, but it adds up over time. I have two children and both have 529 plans which we funded with cash given to them for birthday and Christmas gifts. There are several thousand dollars in each of their accounts.
A great way to gift college through a 529 plan is to use a service like Backer. Backer makes it easy to set up and contribute to a 529 plan! After you set it up, your child will be given a unique URL — for example, backer.com/child’s name. Plus, you can get $10 for every new backer who joins!
You can share this URL with your family, and they can gift it to a 529 plan easily! In our family, this is Grandma and Grandpa’s way of giving money to our children and it really counts! Check it out here.
A close second behind Backer is Uromise. Upromise has been around for a long time and you can link a 529 to a range of rewards programs, purchase discounts and even a credit card. This is a great tool for grandparents to save up for a grandchild’s college.
Buy a share
If contributing to a 529 plan isn’t a realistic option (or your preferred choice for whatever reason), consider giving an actual stake in the kid’s favorite stock (or an ETF). There are a number of websites dedicated to this very option.
GiveAShare allows you to buy a share and have the actual certificate (or replica certificate) framed as a gift. Your share is also registered electronically, so you are a real shareholder. Check out GiveAShare here >>
The public recently announced the ability to buy fractions of shares and give them away (they call them stock slices). The public charges $0 in commissions to buy a piece of stock. And then you can gift it to someone (whether your kids or someone else) for the holidays!
If you want to look at all your options, check out our list of the best custody accounts for kids.
Currently, there are a growing number of limited liability companies, but most of these companies do not offer custody accounts or have high account maintenance fees for those with low account balances.
Related: Where to Invest in Fractions of Stocks
Set up a DRiP plan
Another way to buy stock for a child is to buy a dividend reinvestment plan (DRiP) directly from a company.
To set up a DRiP, you need to buy a share of the company’s stock and then sign up for automatic dividend reinvestment. Many kid-friendly companies like Hershey’s and Hasbro offer royalty-free DRiP plans for shareholders.
In addition, most of our favorite free investment sites, such as B. TD Ameritrade , a free reinvestment of dividends within your account.
Don’t forget the teaching opportunities
Giving away a share of stock is a great way to help a child get on a solid financial footing, but the lessons it brings are even more important. If you give a special child a stock share, you should also give them financial literacy tools.
If they are familiar with this, you could teach them how to value a stock on Yahoo Finance, or you could give them a book that teaches them age-appropriate lessons.