Janet, a grandmother from New Orleans, wants to give something extra for the holidays this year, but doesn’t want to go to the mall to get it. She doesn’t shop online either.
She wants to buy shares in her six grandchildren.
“I saw something that said that this year the product is the most important thing,” she wrote. “How exactly to make a gift in the form of shares and how to make sure that children learn something, and not just exchange them for money.”
Having created stock portfolios for my own children – long before it was easy to give stocks – I have strong feelings about how to properly gift stocks, whether it’s a one-off holiday gift, an annual or half-year life lesson.
With that in mind, here’s my first-ever guide to kids’ promotions for holiday shopping.
It was difficult to donate shares until 2020. When my daughters were born in the 1990s, you had to open an account in their name and buy full shares of the stocks you chose. You usually pay more than usual for small purchases; being a micro-investor – investing a lot of money – was ineffective at best and prohibitive at worst.
Those days are over.
Whether it’s Stock in Parts by Fidelity Investments, Stock Fragments by Charles Schwab & Co. or just trading fractional stocks in an app like Robinhood, investing has never been easier, even on a micro scale.
Pick your favorite company – or more of them – create an account and set the dollar amount, which can be as little as $ 1 depending on the broker involved).
However, I believe it makes sense to have some guidelines, at least in your own head, while you shop.
For example, this is a gift, children’s money. A college savings and an inheritance or other major investment are two different things.
So, if a child wants to cash out the stock you buy him, there are lessons for him too, like looking back to the future and seeing the price of his impatience.
Ask the children to contribute and give them as much control as possible. You will learn more from stories and recommendations than by attaching many lines and rules to your gift.
Detractors will point out that money in a child’s name – in a gift account for minors – is handled differently when it comes to college aid, which can create problems. This is true, but since we’re talking about small dollar amounts rather than college savings or a lifetime inheritance, it’s hard to accumulate enough money to actually turn ownership into a major issue.
Decide who will be the adult in control of the account; Janet can make her children – the parents of the recipient of the gift – trustees, or she can do it herself.
Remember, you are investing in lessons, not living. There is a difference between “the best inventory” and “the right gift” to keep the child interested.
A suitable stock is that they understand where they like or use the products, and that they can talk about the business as a consumer. Child “gets” McDonald’s (ticker MCD); they don’t really know about banks or energy companies.
You may love index funds and want them to be the cornerstone of your adult kids’ portfolio as they enter the working world, but stick with what they understand now and teach them the benefits of ownership.
Focus your gift on one or two issues, or diversify and build a portfolio; your decision may depend on whether it is a one-off gift or something you add in the future.
My daughters’ portfolios were built mostly on well-known brand promotions, but we took a couple of flyers. They have learned from the winners, losers and average performers; my kids still hold many of the stocks that were gifted to them, but I also realize that what was right for a little girl – like Mattel (MAT code bought when my kids were into American Girl dolls) – might not be the best choice for a grown woman.
However, their mix includes some lifelong choices such as The Hershey Co. (HSY); the stock was as strong as my eldest daughter’s lifelong love for chocolate.
Consider the attachment as a secondary gift in support of the primary gift the child receives. Think sports goods for sports kids, video game companies for gamers, and more.
Here are a few of the stocks that will make room under your tree this year:
Loud names: My youngest daughter was a teenager when we bought stock in Microsoft (MSFT) based on her simple assumption that the company seemed to have a hand in everything it did online and through the computer. Apple (AAPL) would meet the same requirements.
Google is ubiquitous, so Alphabet (GOOG) is worth considering, while Meta Platforms (FB, renamed Facebook) are suitable for kids who live on Facebook and Instagram.
For a sports child: Some famous franchises used to be public, but today there are several options. Manchester United (MANU) or Juventus (JVSTF, penny) are international options for your young footballer. Madison Square Garden Sports Corp. (MSGS) – owner of the New York Knicks and New York Rangers franchises – might appeal to sports fans in New York, while auto racing fans and Atlanta Braves fans can opt for Liberty Media Corp., which has multiple episodes. shares, which represent an equity stake in a Braves or Formula One race.
Nike (NKE) and Under Armor (UAA) are sportswear and apparel options.
For gamers: Nvidia (NVDA) is the chipmaker of choice for a number of professional esports leagues and leading streamers; Electronic Arts (EA) or Activision Blizzard (ATVI) – the latter owning franchises such as Call of Duty, Overwatch and World of Warcraft – or Take-Two Interactive Software (TTWO, among others the owner of Grand Theft Auto and Red Dead Redemption). be butts for the jockeys.
Toys: The long-term track record of toy makers is pretty much boring, but it can’t be denied that toy stocks are the perfect complement to a Barbie or Hot Wheels (Mattel) gift, a monopoly game, or Nerf toys (Hasbro, HAS). , etc.
Entertainment lovers: Live Nation Entertainment (LYV) might be the go-to choice for music lovers, while moviegoers might get a glimpse of AMC Entertainment (AMC) theater owners – one of the original meme shares, so it might require more control than most options here – or Cinemark Holdings ( CNK).
And whether it’s movies, streaming, or theme parks, with the Walt Disney Co. (DIS) it’s hard to go wrong.
Trade marks: You can teach a lot about business, stock ownership and more by talking about investing around your daily consumption habits, which is why companies like McDonald’s or Wendy’s (WEN), Coca-Cola (KO), Hershey, Nestle (NSRGY) or Tootsie Roll Industry (TR) will never go out of style.
The possibilities are nearly endless, so be creative and know there is no wrong choice. Do it right, and you will make a gift not for the holidays, but for life.
Disclosure: I own Microsoft, Coca-Cola and Hershey shares in my portfolio, but do not have positions in any of the other shares mentioned here.