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Author: 2gifts Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75531  
Subject: Re: ot 16th birthday Date: 10/25/2013 8:56 AM
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I've considered some type of "investment" gift to my grandchildren

This is an excellent idea.

Anyway, I am wanting to do something lasting for say 500-1K that will help teach them about investing/saving. It is possible that if I started at the lower end of this I might add some to it at Christmas or something. An example might be a Christmas club account or similar.
I don't really have a concrete idea of what the gift might actually be and I'd rather have something in mind before calling my broker. I don't really like the idea of setting up an account for each child it seems like too much.
I looked into drip accounts and you have to be 18 I believe.


They don't have to be 18 to have accounts. You can do a UTMA/UGMA account for them, and you can make yourself the custodian so that you control the account until they reach the age of majority, which is usually 18, but is set by each state.

I would recommend DRIPs in something that is of interest to them even though DRIPS do have more record-keeping that go with them. I'd suggest something like Hasbro, McDonald's, ExxonMobil, etc. that you can screen so that you are buying good quality stocks that pay good dividends and have dividend reinvestment programs. Or you can set up the account at a brokerage like E-Trade that will also let you reinvest the dividends for free. I'm be inclined to do the E-Trade account just because I find it easier to do the buying and selling on your own schedule vs. sending in an order to the Plan directly.

As you are starting this when the grandkids are in their teens, I would also make this an opportunity to do it with them as a family activity. You can let them choose the stocks, you can go to the library with them to do the research, and you can let them watch as you do the transactions.

I started buying DRIPs for my kids when they were 3 years old, and now that they are out of college, they each have a nice nest egg, and the dividends keep on growing. We talked about stocks and money management often, and they understood what stocks meant, so if they liked doing business somewhere, it was not unusual for them to ask if that was a public company. I have my daughter to thank for Panera, which has almost tripled over time.

Once you start such an account for the grandkids, you can add money to it for various gifts (birthday, Christmas, graduation, etc.) and you can also let them add money if they want.

This could be a great way to start them off with a nice financial foundation.
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