You’ve heard a lot this year about how hard it can be for youngsters to get a good education when they’re not in the classroom.
But this year also has brought investors what amounts to the greatest home-teaching tool the stock market has ever seen, and the perfect gift for birthday online to give your favorite young investor — or would-be investor — for the holidays.
It goes by a bunch of names, and it combines a few different concepts that have been kicking around the investment world for years, but the idea boils down to: Buy your kids a few bucks of stock.
Whether it is “Stocks by the Slice” from Fidelity Investments, “Stock Slices” from Charles Schwab & Co., or simply trading in fractional shares on an app like Robinhood, a happy birthday gifts online delivery of stock has never been easier.
Pick a favorite company — or a few favorite companies — and a dollar amount (as little as $1, depending on the brokerage involved), set up an account and you’re off to the races. It’s ideal for grandparents or parents wanting to teach lifelong lessons about money and investing.
Until recently, however, giving youngsters a birthday gift of stock was a pain, and I would know.
When my daughters were born in the early 1990s, I opened brokerage accounts for each of them as soon as they had Social Security numbers. My premise was that until the girls were old enough to appreciate what was inside a box — rather than the act of ripping wrapping paper and having a new doodad — I would let grandparents spoil them, while I enriched their future.
Executing the plan wasn’t easy, like it is now.
A few hundred dollars might buy a few dozen shares, but not the “round lot” of 100 necessary to get commission discounts. Discount brokerages were established in the mid-1970s, but weren’t a great deal for a micro investor — someone setting aside dribbles of cash — for decades.
As a result, buying and selling shares in my children’s accounts was clunky; I tolerated above-average commissions to achieve my mission. There were weird dollar amounts or odd share counts; it was “14 shares of UnderArmour,” — valued at $190 when my youngest daughter picked it as a young teenager — rather than a neat, clean “$200 of Coca-Cola” or “10 shares of Kraft Heinz.”
Mutual funds were a gifting option – they sold fractional shares so buying round-dollar purchases was easy – but never offered the lessons that stocks do about ownership, about controlling assets you believe are valuable and more.
source - https://www.seattletimes.com/business/the-ultimate-2020-holiday-gift-stock-on-sale-now/
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