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If you are giving stock to a child as a gift, you may wish to give shares that will increase in value as the child matures. Select mutual funds that reinvest dividends, or stocks that offer a "dividend reinvestment plan," commonly called a DRIP. This way, when dividends are paid for the shares you have gifted, the money is used to purchase additional shares of the stock. Over time, no matter how small or large the initial investment was, the value of your stock gift will have multiplied and increased, hopefully providing a nice beginning to the young adults' future.
Although there are no guarantees with stocks, careful research into companies that you are interested in will help you select shares that are more likely to remain stable or recover quickly from market fluctuations. Study the last ten years of history of a stock and get the input of a professional stockbroker.
As the child matures, discuss your gift of shares with him, review the quarterly reports together, and encourage him to invest his own money into the stock portfolio. -
Giving the actual, printed stock certificate to a child is a fun and interesting gift idea. Some of the companies that make young children's favorite toys or videos have colorful and attractive stock certificates that you can frame for the gift.
It can be a single share or multiple shares, normally no more than ten. Do not opt to buy a large quantity of shares because you may not be able to use a dividend reinvestment plan when you or the child hold the certificate. You can purchase a single share or ten shares yourself, and the certificate is sent to you directly from the company instead of the stock being held in a uniform gifts to minors account at a brokerage.
When you receive the certificate, you can have it framed for the child to hang in her room. Companies like Disney, Build-A-Bear Workshop Inc., DreamWorks Animation SKG Inc., and Mattel Inc. use colorful images of their products on their stock certificates, making them favorites for this type of stock gifting to kids.
