A grandmother once asked me what else she could give her grandchildren instead of savings bonds. She wanted to start their investing habits…
She should consider starting with stock in American companies. There are several that kids would know and enjoy, including those in the food and entertainment industries. You would recognize companies such as Disney, Nike, Wrigley gum, Mattel, Microsoft, Pepsi, Coca Cola, Harley Davidson, burger King, McDonalds, Wendys, Kelloggs, Sara Lee, Yum! Brands, and more.
A small investment in the stock market while grandkids are young can pay big dividends, and maybe pay for a college education. While you might make the initial investment, you are also starting the learning process for grandchildren.
You can buy stock in small amounts. Some good places to start small accounts are:
If you have your own broker and account, you can ask your broker to help start a Uniform Gift to Minors account for each grandchild.
You can also start a DRIP (Dividend Re-Investment Program) account directly with a publicly traded company. A DRIP offers another way for your grandchildren to make contributions of their own too, even as little as $10 or $25. Look for information on companies that do DRIPs at http://www.dripinvestor.com which has a DRIP starter guide with helpful information.
When you buy a stock, you can order the actual stock certificate to present to your grandchildren, or you can leave the stock shares in the account with the broker (in street name). If you get the certificate, be sure to keep it in a safe place (it’s as good as cash). If you want more ideas on saving and investing for kids, there are free downloads at http://www.moneygodmother.com.
You should learn which stocks might be good investments by researching them at your local library Remember there is risk with reward, and that a great past performance does not guarantee a stock’s future results.