How do I gift a small share in a stock to a child?
September 27, 2016 4:53 AM   Subscribe

I'd like to gift $100 - $150 in stocks or funds to my 16 year-old for his birthday and I'm looking for tips on how to do this. A few months ago I read something on-line which indicated how to do this via a site like sparkgift but now I can't find the article. If you've done this type of thing before, could you tell us how it went?
posted by qsysopr to Work & Money (4 answers total) 3 users marked this as a favorite
 
The best way is to open an account with yourself as custodian under the Uniform Transfers to Minors Act (or whatever variation is involved in your jurisdiction). The custodian has the power to buy, sell, receive income, etc. until the minor turns 18.
posted by megatherium at 5:35 AM on September 27, 2016 [1 favorite]


To clarify, are you seeking to get him into investing as a concept or just provide an small investment that will hopefully grow with time? Is this something that he's expressed an interest in and you want to just help him get the ball rolling or is this something entirely new to him? Will you be offended if he expresses no interest in it and just wants to sell it right away?

As a generic answer, I'd suggest getting him a copy of A Random Walk Down Wall Street as part of the gift. It's a classic explanation of investing from logic rather than emotion, and helps show that index funds are the best investment for almost everyone.

As part of that, I'd encourage you to get him started with an index fund rather than an individual stock. In your price range, you'd be looking at ETF versions of index funds such as VOO. Many brokers now offer 0 transaction cost ETFs, either from their own lines like Vanguard or Fidelity or from a selection of funds like TD Ameritrade.

As long as his parents are reliable, having them set up the custodial account may be easier in the long run, especially if he gets into investing and wants to put his savings into it.

I would discourage you from using one of the places that offers actual physical stocks as gifts, as their transaction costs tend to eat more value than the stock will return in a decade.
posted by Candleman at 7:20 AM on September 27, 2016 [2 favorites]


My mom did this for me via what was at the time, Sharebuilder (now Capital One Investing). It was a custodial account that automatically transferred to my name when I turned 18. She put in some seed money and I had fun researching individual stocks (back before index funds really took off) and trying to make sure I learned.
posted by msbutah at 1:14 PM on September 28, 2016 [1 favorite]


I found a newspaper clipping which actually answered my own question. Here's what Terry Savage wrote in the Tribune, copied below for Mefite's convenience.

-Shares of stock. You don't have to have a lot of money to give small gifts of stock -- shares in the most popular companies or ETFs that will give a child a head start on investing and perhaps spark an interest that will last a lifetime. I recommend three websites that each allow you to start with just a few dollars and maintain an account where more shares can be purchased. The easiest is a gift card from www.Stockpile.com. You'll find them at major retailers or you can purchase online at their website. Charge the gift to your credit card, and the recipient will be able to choose the stock of his/her choice. Sparkgift.com offers a similar service, emailing a gift certificate and helping the recipient open a brokerage account. And at Sharebuilder.com, now a division of Capital One, you can open a no-minimum account. All these accounts have small fees for each purchase, but the goal here is simply to get the investing started. Do remember that at the age of majority (18 in many states) the child takes control of the account!

Thanks for the other responses as well, but they were a little too technical for me as I know little about stock investing and my intent is to have my son learn for himself.
posted by qsysopr at 8:59 AM on January 15, 2017


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