How to Give Direct Purchase Stock Shares as Christmas Gifts

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One major advantage of direct stock purchase plans is that they frequently give the option to give away stock shares for free. Take tax consequences into account when giving stock shares as Christmas gifts with help from a personal asset manager in this free video on investing in the stock market and money management.

Part of the Video Series: Stock Market
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Video Transcript

Hello, I'm Roger Groh. Today we're here to talk about how you can use direct stock purchase plans as part of your gifting programs, for say, Christmas or New Year's or birthdays or special occasions. You can get shares that you already own into the names of people that you would like to reward. Well one of the major advantages of direct stock purchase plans is that they frequently give you the option to do that for free, whereas ordinarily you would have to go and buy stock or perhaps sell stock and endure commissions on both sides, which would drive up your total expense in doing that. For instance in some of the direct stock purchase plans if you were to transfer shares that you've already purchased to another person or entity, they may do that for free, and really it depends on the company and the fees that they charge all of the investors and direct stock purchase plans. Some companies do charge fees. The highest that I've seen are about ten bucks, no matter the number of shares that you trade. That may be significantly less that commissions you would pay if you were to buy shares in the open market. But beware, if you're account is taxable and you sell shares that sell would be subject to income tax, either short or long term, depending on how long you've owned it. So it's not a free-be really when you consider the after tax consequences, meaning you still have to pay capital gain tax or suffer a loss on transfers if they are in tax sensitive accounts. I'm Roger Groh, and that's a little bit about how you use direct stock purchase plans in a gifting program.


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