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 
gift-giving force.

 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 
phones.

 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 
requirements.

 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 
and later.

 Dan Greenshields, CFA, is President of ShareBuilder Securities 
Corporation, a subsidiary of ING Bank, fsb. For more information, visit 
www.sharebuilder.com/gift.

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