Gifting Stocks to Kids
In December of 2022 , I had the pleasure of speaking on a nationally syndicated morning TV show. I talked about giving stocks to kids and not always toys.
As I was talking, I heard the moans and groans of my daughter. If I ever gave my 4-year-old a stock as a gift without explaining how that stock may benefit her in the future, moans and groans are an appropriate response. That is why a conversation about investing, along with basic financial education, is an essential component of the gift. It’s not about the value of the stock or the company you choose to give.
If only there was a start over, edit, or undo button for a live interview. If so, I would have repeated education, education, and more education is the gift, not the stock. Even if the stock does not perform to expectation, there is still a lesson to be learned, such as diversification and not risking the entire savings on a single company.
In my interview, I did provide a few examples of potential public companies a child could see and point to around their home or community. Over time a child could start connecting the dots and grasp the concept of investing in companies around them and not just becoming a consumer of their products and services. This is a strategy and subtle investment worth considering for any little ones in your family.
My daughter will continue to receive toys for gifts, but a conversation on stocks will be in her stocking soon!
Disclosures:
Stock Investing includes risks, including fluctuating prices and loss of principal. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
Dividend payments are not guaranteed and may be reduced or eliminated at any time by the company. Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial does not provide research on individual equities.
