How to Give Direct Purchase Stock Shares as Christmas Gifts

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Stock shares can be great gifts for the holidays. It's a good way to give a friend or family member money without using cash, which can be seen as tacky, and there is a good chance that the stock's value will increase over time. Also, it is a great gift for those hard to shop for people who seem to have everything. By making a direct purchase, you can also save on some of the fees typically associated with purchasing stock.

Things You'll Need

  • Internet access Credit card Recipient's Social Security Number
  • Choose the stock you'd like to buy. Whether you want to buy a big money stock or just one that fits well with the recipient's personality, the easiest way to start is to find direct purchase stocks (or DPPs) online. Not all companies sell their stock in this fashion, but there are hundreds of companies that do. One good place to find a list is at sharebuilder.com.

  • Set up an online trading account. It is possible to contact the company directly but much easier to set up an account with Sharebuilder, eTrade or a similar clearinghouse, especially if you plan to buy stock from more than one company. Simply go the respective website and register. There will be step by step instructions to help you.

  • Purchase the stock. Once you're signed into your account, there should be instructions on how to make your purchases. It will basically be the same process you use to buy other goods and services over the Internet. However additional steps may be required to verify your identity.

  • Transfer the stock to the recipient's name. Remember, you want the recipient to be able to sell his or her stock, so you should not leave it in your name. All you need to do is tell the company that sold you the shares that you would like to make a transfer. You can either call the customer service number or look for "shareholder services" or a similar link on their website to make contact electronically. Be prepared to provide the name, Social Security number and birth date for the new owner.

  • Once you've transferred stock into the name of the recipient, ask the company to send you a paper certificate. This is what you will wrap up and give as the gift. Feel free to frame it or package it as you see fit. Some certificates look better on the wall than others. For example, DreamWorks stock has a picture of Shrek on the front of it, which is perfect for a child's bedroom.

Tips & Warnings

  • Ordering stock directly is usually cheaper than going through an individual broker, but this may not be the case if you already have a well-established brokerage account. If you don't want to go through all of these steps and you'd like to purchase just one share of stock, sites like Frame a Stock or One Share will take care of everything for you, from the initial stock purchase to putting your certificate in a matted frame with a personalized inscription.
  • When deciding what to order, don't consider only the price of the stock share itself. There will also be transfer fees and possibly other charges. Shop around the different rates to find the most affordable option. Be aware that money invested in the stock market is not guaranteed or insured in any way. Don't wait until the last minute. This process could take a couple weeks or more.
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