Options for Stock for Kids (now that there are no certificates)

[FLSUnFIRE]

I'd like to get my nephews a few shares of companies they are familiar with. In times past, I could have given them a physical certificate so they had something tangible and cool!



Any ideas on alternatives now? I don't really want to have to to through (or subject my sister to having to) set up accounts for the kids for such small values. Are there any kid-investing brokers out there that would make this easy and fun?!


Any other ideas for gifts that might spark an interest or at least give them a little experience in saving/investing/money management in a fun way? They are turning 10 and 12 this year.


Thanks!

 

[TexasCanuck]

Stockpile

Personally,

I like Stockpile.com

You can give gift cards to their friends and fractional shares with their own controlled brokerage account once they redeem.

I discovered them when I saw their gift cards at Target last year.

Good Luck in getting your kids interested in investing!!!

Its a great idea!!

 

[BrianB]

Get them something that is stable and pays dividends, and a company they can understand. CocaCola or McDonald's come to mind but there are many others. Set it up as a custodial account and DRIP the dividends. They will be able to see the number of shares grow over time. I did it with Charles Schwab years ago for our daughter but I think most major brokerages can do it. Opening an account on-line shouldn't take more than 15 minutes. No minimum balances, no fees.

Bonus idea #1: As soon as they have W-2 income the current balances and future money can be contributed to a Roth IRA, up to their income level each year. In my opinion, starting a Roth at 15 or 16 is the second greatest gift (after a loving home) you can give a child. We cash matched contributions to our Daughter's Roth from her first paycheck at 16. She graduated college with nearly $50k of stocks in that account and it's still growing.

Bonus idea #2: Give any future birthday and holiday gifts to the kids as contributions to their account. It will be remembered and appreciated long after that toy or clothing is forgotten.

 

[pb4uski]

Fidelity is offering "Stocks by the Slice"

https://www.fidelity.com/trading/fractional-shares

 

[Lewis Clark]

My wife and I did something similar for a nephew. We bought him a few shares of a snack food company - an industry he could understand. As a physical "gift", we sent him a couple of snack food items from that company.

A couple of years later, the company was bought out and the initial investment doubled or tripled in value. My brother then started asking me for stock tips. This was the first time I had ever bought shares of individual stock. I wished I had good stock tips and told him we just got lucky.

 

[FLSUnFIRE]

Thanks, I like the idea of Stockpile as it would let them make the decision and even participate in researching which companies make their favorite things.. I'll talk to my sister more as it would be a little work for her to set up the custodial accounts for them. Certificates would be way cooler though!


I've already recommended to my sister that she open Roths for them as they earn their first taxable income and she was very receptive. It's a few years off but I'll likely offer matching funds and hopefully they can max out completely... I started pretty early but didn't start hiding my money from the IRS until in my early 20s. The impact of another 7 years of contributions would be huge now!


Thanks!

 

[CRLLS]

I recall some 40-50 years ago, we knew a couple who bought their son 1 share of Disney stock in certificate form. As I recall it was a multicolor certificate with Mickey prominently over it, although I may be mistaken. They framed it and put it on his bedroom wall. Last I knew this young boy was a VP of some big bank. I often wonder if that stock certificate had a part in making that happen.

 

[MRG]

Some issues can still be certificated. Check with the transfer agent for which ones.

Printing those things is no easy matter from a technology standpoint. The process is straight out of 1970.

 

[racy]

I'd like to get my nephews a few shares of companies they are familiar with. In times past, I could have given them a physical certificate so they had something tangible and cool!...

Yeah, but our generation grew up on paper. We wrote & sent letters and read paper bound books. But theirs is growing up digitally with email, ebooks, and iPhones, etc. I bet they'd be just fine with a an online account rather than some outdated paper.

 

[Sunset]

OP - You could always print out a fake certificate representing the stock that is actually purchased.
That way there would be something to hang on the wall.

 

[njhowie]

I'd like to get my nephews a few shares of companies they are familiar with. In times past, I could have given them a physical certificate so they had something tangible and cool!



Any ideas on alternatives now? I don't really want to have to to through (or subject my sister to having to) set up accounts for the kids for such small values. Are there any kid-investing brokers out there that would make this easy and fun?!


Any other ideas for gifts that might spark an interest or at least give them a little experience in saving/investing/money management in a fun way? They are turning 10 and 12 this year.


Thanks!

When DD was maybe 3 or 4 I bought her a chunk of McDonald's and Disney. It was past when they sent certificates, but she was obviously familiar with each.

At the time, McDonald's was still sending out an annual coupon book with tons of free food. This is how she got her basic understanding of company ownership.

 

[rodi]

I'm teaching my sons to be index investors... the opposite of you.

younger son opened a roth this past year with 100% invested in Schwab 1000 etf (SCHK). I gave him a very generous match (he put in $500, I matched with $500).

He gets slices of lots of stocks this way and it pays dividends.

Since he's under 18, it's a custodial account till he's of age.

Since he had earned income last year, it made sense to do it as a roth - to also teach deferred benefit. He knows he has to wait to cash it out.

When older son gets off his behind to get a job (he's applying to jobs now) he'll get the same deal.

 

[ERD50]

I'm teaching my sons to be index investors... the opposite of you.

younger son opened a roth this past year with 100% invested in Schwab 1000 etf (SCHK). ....

+1

I really don't think it's a good idea at all to buy a single stock as a learning tool. It goes against the important lesson of diversification. If it goes up dramatically, they might think, wow, I can retire at age 26, a 'good' stock doubles every year! If it goes bankrupt, they may never want to own a stock again.

You just have to sell the idea - "Now you own thousands of stocks!" (3,600 for VTI).

-ERD50

 

[njhowie]

+1

I really don't think it's a good idea at all to buy a single stock as a learning tool. It goes against the important lesson of diversification. If it goes up dramatically, they might think, wow, I can retire at age 26, a 'good' stock doubles every year! If it goes bankrupt, they may never want to own a stock again.

You just have to sell the idea - "Now you own thousands of stocks!" (3,600 for VTI).

-ERD50

Depends what lessons you are trying to teach.

 

[ERD50]

Depends what lessons you are trying to teach.

Yes, but you won't know which (if any) lesson they get until/unless the stock tanks or rockets!

You could always go pick a few individual stocks, and chart them against the index for a lesson.

-ERD50

 

[njhowie]

Yes, but you won't know which (if any) lesson they get until/unless the stock tanks or rockets!

You could always go pick a few individual stocks, and chart them against the index for a lesson.

-ERD50

Sure, and seeing how both McDonald's and Disney have trounced the index over the time period and paid for the kid's college education full-ride, she got the right lesson.

 

[Sunset]

Sure, and seeing how both McDonald's and Disney have trounced the index over the time period and paid for the kid's college education full-ride, she got the right lesson.

Sure, lucky.
But it could have been Enron or Nortel Networks and a different story.

 

[ERD50]

Sure, and seeing how both McDonald's and Disney have trounced the index over the time period and paid for the kid's college education full-ride, she got the right lesson.

What lesson? Buy a functional crystal ball?

-ERD50

 

[Brat]

I think kids should invest in growth stocks, maybe look at the list in VUG or Fidelity's blue chip growth mutual fund. Pick from those lists. I like funds/ETFs because it is tough to pick a winner long term.

I have VUG in the grandkids 529 funds for that reason.

 

[FLSUnFIRE]

Thanks for the responses and enjoying the discussion. I'll probably try Stockpile... emailed my sister first to make sure she's ok with it since it will be a little work for her to set up the account.


My intention is for this to be fun opportunity to learn a bit about investing. Hopefully, it will get them interested in saving and investing some on their own as well. If they pick stocks that go bust, it's a cheap lesson and will still last longer than some virtual credits in a video game or some unwanted gift "weird Uncle FLSunFire" picked out for them. Obviously, as they get older, I will shepherd them towards index funds for "real" investing but they would not exactly be fun (likely with matching funds from me).

 

[pb4uski]

I think to begin with individual stocks like McDonalds or Disney is fine to teach the lesson that by buying stocks you are investing in businesses. Then the second lesson is to diversify your holdings by owning many different stocks and an easy way to do that is through indexing.

 

[FLSUnFIRE]

Going to do Stockpile! My sister finally got back to me and thinks it's a great idea. I agree, individual stocks are not ideal for "investing" but are great to get them engaged and excited as they can own something they can relate to while learning about investing.... We can move on to more diversified accounts (and/or valuing equities) later when there is "real" money at stake (depending on my situation at the time, I'll likely match any Roth contribution at some ratio when they are teens).


Who knows, maybe one of them will FIRE at 20 if they pick the right thing. They can't go broke cause it's my money. I told my sister I need to teach them to be financially responsible so they'll be able to care for me when I'm a lonely old man since I have no kids.... Who needs a rich uncle when you can have wealthy nephews and nieces!


FLSunFIRE

 

[ERD50]

... Who knows, maybe one of them will FIRE at 20 if they pick the right thing. They can't go broke cause it's my money. ...

FLSunFIRE

I actually think this is the wrong way to go about it. Teaching them they can't lose? That's not real life, and not a good lesson at all, it's backwards, IMO.

... I agree, individual stocks are not ideal for "investing" but are great to get them engaged and excited as they can own something they can relate to while learning about investing....

FLSunFIRE

I think to begin with individual stocks like McDonalds or Disney is fine to teach the lesson that by buying stocks you are investing in businesses. Then the second lesson is to diversify your holdings by owning many different stocks and an easy way to do that is through indexing.

I wonder about that. How many times can you pass a McD's and say "you own a part of that"? Is it that exciting? Wouldn't it get old fast?

I dunno, but it might be be more exciting (and we are using the term "exciting" pretty loosly here ) to point out just about every business you go by, and say "you own a piece of that, and that, and that!" You could even make a game of it, and keep the pages of the prospectus of VTI with the alphabetical list of stocks, and try to find them on the list as you drive by.

Like the T-shirt the kids bought me, with a line of a dozen different beer taps on it "Diversity is good!". Just my opinion.

-ERD50

 

[FLSUnFIRE]

I actually think this is the wrong way to go about it. Teaching them they can't lose? That's not real life, and not a good lesson at all, it's backwards, IMO.


I wonder about that. How many times can you pass a McD's and say "you own a part of that"? Is it that exciting? Wouldn't it get old fast?

I dunno, but it might be be more exciting (and we are using the term "exciting" pretty loosly here ) to point out just about every business you go by, and say "you own a piece of that, and that, and that!" You could even make a game of it, and keep the pages of the prospectus of VTI with the alphabetical list of stocks, and try to find them on the list as you drive by.

Like the T-shirt the kids bought me, with a line of a dozen different beer taps on it "Diversity is good!". Just my opinion.

-ERD50

They very well can lose.. they are starting with my money but it is theirs upon receipt. We are talking $50-100/birthday... this isn't high stakes. Going through the process of picking a company and buying it is a lot more fun and educational as they may research who makes whatever they are into that they want to buy. Even if they pick horrible "investments" they are still likely be worth more years from now than a crappy beat up toy or sweater from "weird uncle FLSunFIRE!"



I only hold two individual stocks and I absolutely get a kick out of owning them (also have a couple very out of the money limit orders that will likely never execute for TSLA and AMZN just to own them for fun even though I cannot justify the valuations even at my heavily discounted bid). I only sold off the individual stocks I accumulated when I was young (started DRIPing in my early 20s) because I needed to raise cash for my divorce and they were insignificant to my NW and divesting of them simplified my record keeping and taxes.

 

[Brat]

I haven't tried it but Fidelity will let you buy a slice of a share. Pick out a couple of companies that the kids can watch. NIKE has been hit because the retailers they sell to are having difficulties but their own stores and online have been strong. Does the family shop at Costco? How about Disney, Apple, Starbucks, Amazon? Make a list and let them choose. Prepare them for the reality that prices go down as well as up. Depending on their age and interest share with them that the pandemic is depressing sales/profits for many companies.