Best Christmas Present – Stocks
Every Christmas and birthday my kids get many presents. A few weeks later the presents are mostly forgotten or broken. Such a waste! I started brainstorming ideas that could cut down on the clutter and be a long term benefit for them. I considered savings accounts, bonds, cds and the cookie jar. Stocks was the winner!
Here are my reasons for picking stocks:
1. High dividend stocks make money for them.
2. Stocks splits give them more stocks.
3. My teen thinks its cool to have a stock portfolio (my youngest,8, doesn’t care right now).
4. I pick stocks of products that they like. In our case, they get 4 McDonald’s stock a year.
5. If you aren’t into picking stocks, go with an index fund.
Four a year? That’s not much!
True, but take the case of my 8 year old. He will have 40 shares when he turns 18, plus the dividend that gets paid. It doesn’t take long for the stocks to accumulate enough dividend to start buying more stocks. Keep reinvesting the dividend, it adds up!
Risk
I know that the market will go up and down. This is a long term investment for them. I’m not taking too much risk
What about fees?
I use Sharebuilder for my kid’s portfolio. Their service is a bit odd in that you get a $4 fee when you buy on Tuesday (and only on Tuesday), other days it’s $12. Since my kids only buy twice a year and aren’t gaming the market it works out best for them. They also allow custodian accounts which is what you will need.
Action time:
1. Decid how much to buy.
2. Sign up for a service like Sharebuilder.
3. Open a custodian account in your child’s name.
4. Deposit the money.
5. Buy!
If your kids keep the investment going, they could potentially have a million when they retire. Like I said earlier, this is a long term benefit for them!
Tags: birthday, children, christmas, finance, future, gift idea, good idea, index fund, invest, investing, kids, money, presents, shrarebuilder, stock, stock market
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