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Author: soycapital Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 74759  
Subject: ot 16th birthday Date: 10/24/2013 9:59 PM
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Yep 16th birthday for Isaac one of 12 grandchildren I mention that for a reason (by doing this I may be committing myself to doing it at least 11 more times if I am around that long).

I've considered some type of "investment" gift to my grandchildren for some time but have never really done anything besides buy them some treasury bonds for Christmas (tired of seeing all of the money wasted on Walmart junk. I also attempted to have mom open savings accounts for each one of them and then I would contribute to it every year. She did not take the time to deal with opening the accounts (it's a long story). Have bought all my kids Dave Ramsey books/games/teaching info and other investment books. I'd say maybe a little has rubbed off on the my kids a little the key word here. So maybe I need to do something for the grandkids directly.

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.
Ideas?
thanks in advance..............
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Author: pauleckler Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 73636 of 74759
Subject: Re: ot 16th birthday Date: 10/24/2013 11:13 PM
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You can always consider giving them shares of stock in companies that young people might find of interest. Disney, Apple, Mattel, Hasbro, Under Armour, Nike. There are probably lots of them.

You can buy shares under the uniform gift to minor act. If you own them already, and you hold the certificates, you can have the stock registrar transfer shares to your recipient. Or if in a broker account, the broker will transfer for free usually if the recipient has a brokerage account. You can be charged a fee to order out a stock certificate.

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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: 73637 of 74759
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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Author: reallyalldone Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 73638 of 74759
Subject: Re: ot 16th birthday Date: 10/25/2013 9:39 AM
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She did not take the time to deal with opening the accounts (it's a long story).

If you open UGMA accounts, it will be the parents' responsibility to deal with any tax issues. If you gift shares you own, they will need a record of the cost basis. If you go with any DRIP, those records need to be shared as well.

UGMA accounts also are considered assets of the child for financial aid for college.

It's not as simple as it seems.

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Author: soycapital Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 73639 of 74759
Subject: Re: ot 16th birthday Date: 10/25/2013 9:50 AM
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<It's not as simple as it seems. >

That is what I have run into also and that is why I've ended up buying them treasury bonds so far.

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Author: buzman Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 73641 of 74759
Subject: Re: ot 16th birthday Date: 10/25/2013 3:19 PM
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We started buying I bond Christmas presents for our nieces and nephews years ago.

Probably need add our granddaughter to the list.

Sure stocks do better but I bonds are so easy to buy.

When they turn 18 THEY have to figure out how to open an Treasury Direct account. It's sort of a two-fer.

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Author: BruceCM Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 73647 of 74759
Subject: Re: ot 16th birthday Date: 10/26/2013 1:22 PM
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One alternative might be to set up the UTMA at your brokerage and with the $1,000, buy a dividend paying stock, with the agreement that dividends will be paid out to the child each quarter/semiannually/annually. Kids brains are wired to deal with the here-and-now rather than longer term benefit abstractions, so the small stream of income will be real to them, thus they will likely be more attentive when you talk to them about stocks, the stock market and how dividend payments work.

BruceM

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