If you’re still hunting for last-minute holiday gifts for loved ones, this idea could save the day…
It’s better than traditional stocking stuffers like ties, cheap jewelry, candies, or other sundries. And it’s just as easy to buy.
While your family members might not get instant gratification from it, they’ll be thanking you years and decades down the road…
The idea is simple: The gift of stock ownership.
Here’s how it works…
Holiday Shopping for Stocks
It may sound like a hassle to buy someone a stock. But there are a few simple ways.
The first way to gift someone a stock is to use a website such as Stockpile or GiveAshare. These sites offer the ability to not only buy someone a stock, but also get a physical certificate.
But there’s a downside to buying on these sites…
You’ll pay big transfer fees. So much so that a stock that might cost you $25 per share on your brokerage might come to nearly $100 after fees.
For a single share that you’re intending to gift, that’s not a big deal. I’ve used GiveAShare to buy single shares including Berkshire Hathaway B shares for my dad for Father’s Day one year… and a share of Starbucks for my wife on our first anniversary.
It’s a cool gift idea, after all. Especially if you want to have something to frame up on the wall.
But there’s an easier way to invest in hundreds of companies. And you can set it up so that it truly becomes the gift that keeps on giving.
How? With a direct stock purchase plan (DSPP).
Many companies offer the ability to directly buy shares. As an example, let’s use Home Depot…
Now, you can’t just grab a share of the stock when checking out next time you’re at one of the home improvement retailer’s stores…
But if you go on the company website and look for the Investor Relations section, you can find a link to the company’s DSPP. You can check it out here.
The site shows the fees involved – which are far lower than buying a single share on a gift site. In this case, Home Depot investors need a minimum $500 investment to get started owning Home Depot shares. Other companies may have higher or lower minimums.
The really fun feature? You can set up additional recurring buys.
So if you’re investing for a child, you could sock away $25 or $50 per month and show them how small investments can add up over time. Again, the minimal amount will vary by company.
As with any DSPP plan, however, the real advantage is the low-cost dividend reinvestment plan (DRIP).
For any stock that pays a dividend, you can either get a paper check mailed out quarterly… or have that reinvested for you automatically. Most DSPPs are set up to reinvest those dividends at no charge.
That’s huge. Especially if you select a company that has a history of paying growing dividends. You’ll be able to start compounding wealth at a young age… which will allow you to reap greater rewards over time.
If you want to learn more about gifting shares to loved ones, look at your favorite company’s investor relations website. Or Google the ticker symbol and DSPP. That should take you where you need to go to get started.
Ideally, the earlier you get a loved one started, the better. The more time the money has to earn, the greater the opportunity for compounding.
This is truly a gift that keeps on giving.
Regards,
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Andrew Packer
Analyst, Palm Beach Daily
P.S. Do you plan to give your loved ones stocks for the holidays? Let us know right here…