Give the Gift of Stock: A Smart Move for Kids (and Tired Parents)?

Kids today? They’re drowning in toys. When holidays roll around, the sheer volume of stuff can be overwhelming, even for parents. So, what if there’s a way to sidestep the plastic avalanche, actually help a child’s future, and sneak in a valuable lesson? Enter the gift of stock and investing.

Millennial parents, like myself, especially appreciate this. Our kids get showered with gifts, and by January, most of it sits untouched. What if that same money went towards something that could actually grow? Think about it: gifting stock is a long-term strategy, a seed planted for future financial well-being. And let’s face it, it’s a refreshing change from the usual plastic trinkets. For extended family wondering what to give, this is a gold mine.
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How to Ace the Gift of Stock for Kids

So, how do you actually make this happen? There are several avenues, each with its own quirks and advantages.

The “Wow” Factor: Framed Stock Certificates
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Want a truly memorable gift? Consider a framed stock certificate. Services like GiveAShare let you purchase a single share of stock, have it beautifully framed, and officially register the recipient as a shareholder. It’s a tangible symbol of ownership, perfect for sparking curiosity about the market.

Stacking Up with 529 Plans

In my experience, the most practical approach is often contributing to a 529 or ABLE account. Many parents have already started these college savings plans, and any extra contribution is a welcome boost.

While you could set up your own 529 account with the child as the beneficiary, it’s usually simpler to ask the parents if they already have one. Even a small contribution of $20 or $50 can make a difference over time. Personally, my kids’ 529 plans, funded partly through cash gifts, have grown into substantial sums.

Services like Backer and Upromise further streamline this process. Backer provides a unique URL for your child’s 529 plan, making it easy for family and friends to contribute. Upromise links your 529 to various rewards programs and shopping rebates, adding a little extra savings along the way. Gift of College even offers physical and electronic gift cards specifically for 529 contributions.

Gifting an Actual Share of Stock

If 529 plans aren’t the right fit, gifting an actual share of stock is another solid option. GiveAShare, as mentioned before, excels in this area, providing a visually appealing, framed certificate.

Alternatively, if you already have a brokerage account with Fidelity, Charles Schwab, or Vanguard, transferring shares as a gift is usually straightforward, especially if the child has a UGMA (Uniform Gift to Minors Act) account at the same firm. Setting up a UGMA account is simpler than you might think.

DRiP It Up: Dividend Reinvestment Plans

Dividend Reinvestment Plans (DRiPs) offer another entry point into stock ownership. Traditionally, these involved buying stock directly from a company and automatically reinvesting the dividends. While some companies like Hershey’s and Hasbro still offer no-fee DRiP plans, most major brokerages now offer free dividend reinvestment within your account. This effectively makes the process much easier.

More Than Just a Gift: Financial Literacy

The gift of stock isn’t just about the money; it’s about the lessons it can teach. Pair the stock with resources to boost financial literacy. Show them how to research a company on Yahoo Finance. Give them a book tailored to their age group.

Here are some favorite financial books by age range:

Age 0-4: Money A to Z by Scott Alan Turner Age 5-8: A Chair For My Mother by Vera Williams Age 9-11: The Secret Millionaires Club by Andy and Amy Heward Age 12-14: The Young Entrepreneur’s Guide to Starting and Running a Business by Steve Mariotti Age 15-17: The Money Savvy Student by Adam Carroll Age 18+: I Will Teach You To Be Rich by Ramit Sethi

These books can initiate conversations about money, investing, and financial responsibility.

Consider This, Though…

While gifting stock is a great concept, a few things warrant pause. Firstly, the tax implications can be a bit complex, especially with UGMA accounts. It’s wise to consult a tax advisor to fully understand the rules. Secondly, market volatility is a reality. Be prepared for the possibility that the stock’s value could decrease. Finally, make sure the child is actually interested in learning about investing. A forced lesson is unlikely to stick.

Ultimately, gifting stock is a forward-thinking gesture. It’s about more than just presents. It’s about setting the stage for a financially secure future and sparking an interest in the world of investing. Have you tried it?

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Keywords: gift of stock, stock for kids, investing for kids, 529 plan, UGMA account, financial literacy, dividend reinvestment, gifting stock