This year, avoid the mall and buy gifts on the stock market

If you’re looking for great prices on holiday gifts this year, skip the mall and head to the stock market.

The offers are real and long after the toys are broken and the clothes are stained, faded and outgrown, your gift will keep on giving.

This is not an encouragement to dip into stocks during a year of market decline; investors should make these investment decisions based on their portfolio, financial plans and goals, and feelings about the market.

But stock giveaways should be hot this year as the stock market has put them up for sale, giving them greater long-term potential. In addition, they are never wrong in size.

It’s not only one of my favorite gift ideas, it’s also one of my biggest personal financial successes, because I started giving stock to my daughters as soon as they had social security numbers.

My daughters were born in the early 1990s; stock donations were difficult to make at the time.

A few hundred dollars wouldn’t buy the “round lot” of 100 shares needed to get reduced commissions. Discount brokers – which started in the mid-1970s – were not adept at helping the micro-investor, someone who poured small amounts into an account for years.

Mutual funds were a potential alternative, but they didn’t offer the lessons that stocks offer about ownership, control over assets you consider valuable and more.

A child may understand that he likes McDonald’s and may want to own it. they don’t obtain this context from an index fund with dozens or hundreds of stocks.

Until the kids were old enough to appreciate what was in a box – rather than tearing up some wrapping paper and having a new thing – I let the grandparents buy the presents. while I enriched their future.

As the kids got older and needed something more tangible and immediate from me, I spent more on typical gifts and less in their wallets, but I still put aside a few hundred dollars each year.

Through regular conversations about their mini-portfolios, my kids learned about investing, compounding, dividends, the time value of money, and so much more.

By the age of 10, my kids could talk rudimentary actions. They discussed the reasons for buying a business and were involved in decisions to add to an existing stake or put something new in the portfolio.

The girls also knew it was their money, to be used for whatever they wanted as adults; my promise was to contribute until they were 21 and took over the management of the accounts themselves.

Now aged 31 and 29, the girls have seen the benefits of long-term investing and mostly want to leave the money in place and work for them.

Mission accomplished.

Today, stock gifts are easy, which is precisely why it should be a go-to for anyone looking to raise cash-saving kids or grandkids.

There are a number of apps that allow investors to exchange small amounts of money into fractional shares, and programs like Charles Schwab & Co.’s “Stock Slices”, Fidelity’s “Stocks by the Slice” Investments or other traditional brokerage plans.

Simply pick a favorite company or two and a dollar amount (as little as $1, depending on the brokerage/application involved), create a “gifts to miners” account, and off you go.

It’s ideal for grandparents or parents who want to teach lifelong lessons about money and investing.

For my children, I wanted businesses that they would recognize and understand; we talked about owning McDonald’s – not Burger King – and how we benefited as shareholders when someone made the decision to go to Mickey D’s over their competitors.

They moved from toy makers and food companies to computer companies and electronics manufacturers as their interests changed.

On their 21st birthdays, each of my daughters took full control of her wallet; both had over $20,000, good enough for only a few hundred dollars set aside each year.

This money was the accumulated value of holiday and birthday gifts not given the monetary value of things that never ended up in the basket of old toys, the pile of underappreciated and unappreciated “shows of love” or things that broke or were played with during a trip that ended at the city dump.

In the meantime, these portfolios continue to be managed conservatively; my kids have barely touched the money, partly because they love the freedom it gives them.

When my eldest daughter took a new job across the country this year, she told me the portfolio gave her the courage to move, knowing that if things didn’t work out with the drastic job change she was chasing, she wouldn’t be left broke and scrambling.

The girls said the whole experience of growing up with investments — from owning the accounts to discussing how to manage them — made them the envy of their friends and classmates.

My only regret is that I wasn’t more frugal with vacation expenses, so I could have stocked up more to give them a better start.

I won’t make the same mistake with my future grandkids, but there’s no reason anyone should have a similar problem now.

If you’re afraid to do this because you don’t know about investing, this is your chance to learn about it together.

If your child/grandchild has shown interest in a certain subject or career, investments can help foster this.

Be creative; there’s almost no limit to what you can give your kids with a few dollars in stock.

But take advantage of the tools that exist now to give your family a head start on their financial future. There is no wrong move, no wrong investment; even losses teach lessons.

And take advantage of a market that has depreciated stocks by around 15% this year. In a year when there aren’t many cost-sensitive, money-saving deals, giveaway stocks are a bargain.

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