Buying Stocks (or Etfs) For Kids
Q: Is there a reasonable way to purchase a few shares of a stock (or ETF) as a present for a child? I imagine treasury bonds would be easier, but I think stocks would be more exciting. For example, my goddaughter's confirmation is coming up. Could I somehow get her a single share of SPY? Ideally, I'd like to minimize the parents' involvement. Thinking specifically of my goddaughter, her parents aren't exactly the financially saavy type. I'd like this to be something that they don't have to put any effort in to.
A: You can open a UGMA account in her name and buy a share of SPY, of course the commission will be a larger percent than makes sense. And most brokers will charge an annual fee on such a small account. So you'd want to find one that will accommodate you. You may be better off buying it in your account and asking for a stock certificate, I think they can still do that. they charge a lot of money for their service ($39 transfer fee and depending on the stock, they seem to sometimes require you to buy a frame from them, ie. for a share of Apple, I couldn't get the thing to not include a $64 frame. For a share of BUD, though, it would allow me to choose a paper frame for free). But it is easy and looks like they make them pretty nice. Nice idea. If you are giving her a single share of stock, or just a few shares in one company, consider opening a dividend reinvestment plan (DRIP). That way, in future years she could add any number shares to it from time to time on her own with a minimum of effort and without paying any brokerage costs.
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