’Tis the season when children lose their minds and actually visualize their parents as walking, talking ATMs with direct ties to Santa Claus. Visions of sugar plums and visions of them playing their favorite new video game or running through the neighborhood in their new KD’s not only dance through their heads, but they seem unable to utter a single sentence without somehow getting in ‘an ask.’
Each holiday season, I usually make my 10-year-old son figure out which company makes the majority of the ‘stuff’ he wants and I buy a share of stock in that company for him. Over the past few years he’s received shares of Nike, Microsoft, and Apple to name a few. You can do this at sites like Give A Share or Unique Stock Gift.
In addition to the stock, which comes with a beautiful certificate that you order framed (or frame yourself to save a few dollars), it’s gotten him into the habit of wanting to be an investor as well as a consumer.
I remember one year, after giving him a share of Nike stock, and explaining that he is now a partial owner of the company and shares in the company’s profits, he encouraged several of his friends to buy Nike sneakers… in addition to making a case to me that I should buy even more of the shoes for him in order to make him ‘financially sound in the future.’
1. Investment Accounts: As his interest in investing has grown, I decided to up the ante this year. I opened an investment account for him at TD Ameritrade online in a matter of minutes. You can open online brokerage accounts at TD Ameritrade for as little as $50. I bought him two shares of Vanguard’s Information Technology Exchange Traded Fund (ETF), which trades under the stock symbol VGY. This allows him to have little pieces of companies like Apple (AAPL), Microsoft (MSFT), and Facebook (FB).
Be sure to do a Google search to find out the latest information on the company from reputable financial websites like Morningstar, WSJ.com, or Marketwatch.com. TD Ameritrade also provides market research and information on the site.
When you go to the TD Ameritrade site, you’ll need to select the option that allows you to be the custodian of the account for a minor. They are called UTMAs (Uniform Transfer to Act), or UGMAs (Uniform Gift to Minor’s Account).
You’ll also need the minor’s social security number. Honestly, this process took a matter of minutes.
Again, invest in something your child can relate to and encourage them to add allowances and financial presents to this account. Exchange traded funds (ETFs) in their area of interest and mutual funds are always a good bet, as they come with professional management. Be sure to check out the fees. The company’s online chat and easily accessed customer service make the process easy.
2. SparkGift: While my gift was intended to get my child to invest on a regular basis, if you want to give a one-time gift of stock or ETFs, SparkGift is a great option. The site lets you buy fractions of shares and funds in increments starting at $20. They provide recommendations for popular choices, and will send a certificate to the lucky recipient in minutes. SparkGift charges a fee of $2.95, plus 3%. The recipient doesn’t pay anything to redeem their shares or hold their investment.
3. Savings Bonds: While they don’t have the same potential for investment growth, a tried and true financial gift that is worth more than cash is the savings bond. Click here to go to the U.S. Treasury’s website, Treasury Direct. As the site states, when you buy savings bonds as gifts, you must hold them in your TreasuryDirect account for at least five business days before you can deliver them to the gift recipient. You must be 18 or older to create a TreasuryDirect account and to buy gift bonds. A child under 18 can get gift deliveries in a Minor linked account, which is established within the TreasuryDirect account of the parent or guardian.
While there is nothing wrong with giving cold hard cash, a few minutes of your time can create an investment and experience for the children you love that will literally help them live richer lives.