How to Buy Stocks for Kids with No Fees
Creating a nest egg is one of the hardest things a person can do financially. Throw kids into the mix and saving gets even harder. Make sure your kids keep more of your and their savings than the brokers do.
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Getting Started
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It's never too early to start saving for your child's future. The banks are full of products and services geared towards low-fee investing that are intended to park your hard-earned dollars in the stock market. But there are ways to invest in the stock market, with no fees, that can both save you money and teach your child valuable knowledge about stock investing.
The Direct Approach
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Many investors may be unaware that large blue-chip companies offer the sale of stock directly to consumers, avoiding middleman brokers and the fees associated with them. These plans, known as Direct Purchase Plans or DPPs, allow parents to build a stock portfolio for their child with ease and often with no minimum purchase. The so-called "no load" investing can be a powerful wealth builder.
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Keep The Momentum
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Once you have created your DPP stock portfolio, you can keep the savings momentum going by looking at Dividend Reinvestment Plans or DRIPs. DRIPs can be purchased only after initial stock is owned in the company, but can build savings even faster by reinvesting dividends back into the plan. DRIPs can also take advantage of dollar cost averaging, which allows you to buy more stock when prices are low and less stock when prices are high.
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- Photo Credit investment image by Kit Wai Chan from Fotolia.com
