Spoil Your Grandkids With Gifts of Stock For Graduation
By Dan Greenshields
Do you have a grandchild graduating from kindergarten, high-school or
college this year? Have you started thinking about what kind of gift
you’ll give? A new study from Grandparents.com finds that American
grandparents spend more than $50 billion annually on their grandkids. Of
that astonishing total, $16 billion alone is going toward clothing and
toys in the form of gifts.
To put that in perspective, the amount of money grandmothers and
grandfathers spend on glitzy party dresses, video game consoles, and crazy
bracelets as graduation, birthday or holiday gifts is about ten times the
government’s annual budget for the National Endowment for the Arts.
Despite the recession, America’s 70 million grandparents continue to be a
Whether your grandchild is graduating from kindergarten, high-school or
college this year, the act of gift-giving is about happiness, both on the
part of the person giving the gift and the person receiving it. But here’s
a question grandparents might want to ask themselves: Am I giving gifts
just for immediate pleasure, or should I be thinking a little bigger about
what a gift can mean for their future?
A different Grandparents.com study found that grandparents spend nearly
$1,700 on each new grandchild annually. Even if a small portion of that
came in the form of stocks — instead of easily forgotten novelty gifts,
for example — long term happiness could show big returns.
Introduce Young Minds to Investing
Giving kids stock isn’t just about the monetary value of the stock shares.
It’s also about introducing young minds to the world of investing. Just
like a new baseball glove inspires dreams of playing in the big leagues, a
share of stock could spark a lifelong passion for numbers, economics, and
current events. Let the kids help decide where to invest the money. No
matter how his or her portfolio performs, they are getting a hands-on
introduction to the world of finance — and financial responsibility.
In a world oversaturated with video games, social media, and television –
71 percent of children between eight and 18-years-old have a TV set in
their bedroom, according to the Kaiser Foundation — kids may welcome a
chance to stimulate their brains with something new. These days, kids can
track their stocks’ performance any time they want, even on their smart
Children who get interested in the stock market at a young age quickly
learn how it works, and in many cases start to invest their own money in
additional shares. Instead of tuning out to mindless reality TV, they
might start flipping to CNBC or Bloomberg television for news. And who
knows, they might even ask you for help.
Invest In Their Future
Investing, obviously, is also about accruing money and learning how to
manage it. This generation of young people needs to understand money
management just as much as their older counterparts.
A good introduction to investing is by purchasing stocks through a
custodial investment account. These accounts give kids ownership over
their portfolio but also give their parents (or grandparents) managerial
authority. Custodial accounts are typically set up in the child’s name,
which could offer a nice tax benefit while also teaching the value of
investing. Because these accounts are for minors almost exclusively, some
brokerage firms offer reduced fees and waive minimum purchase
Part of the joy of grand parenting is spoiling your grandkids. Instead of
doing it just with trendy toys, give a gift that will help get them to
their next graduation and beyond. Your grandchildren will thank you now
Dan Greenshields, CFA, is President of ShareBuilder Securities
Corporation, a subsidiary of ING Bank, fsb. For more information, visit
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