The best time to buy stocks for your kids is now. However, if you want to get your children to take up an interest in investing, you may want to be selective in the type of companies you buy and maybe even frame the stock certificate for them.
When buying stocks for children, there are a few things you need to consider:
1. How much to invest: Most brokerage firms have a minimum investment to open an account of $500, and some have much, much higher minimums. If you are on good terms with a stockbroker, you could probably get away with much less.
2. Certificate or No Certificate: Brokerage firms charge a fee to issue a certificate. I’ve seen fees anywhere from $25 to $80 per certificate.
3. Framing the certificate: If you really want your kids to develop an interest in stocks, it may be helpful to frame the certificate [in a removable frame] for you child’s bedroom, especially if the certificate has an interesting appearance.
4. Holding title: Most investors use either Uniform Gifts to Minors Act [UGMA] accounts or Uniform Transfer to Minors Act [UTMA] accounts. UGMA’s allow the custodian to control the stock until the child reaches age 18. The UTMA account gives the custodian control generally until the age of 21, with the possible exception of California, which is somewhat unusual.
[Several years ago, when I looked into UTMA’s very closely, I read in several publications that California laws allowed a UTMA custodian to control the funds until age 25. I read the actual law but found it very confusing. I called six different banks and asked them what the maximum UTMA age was. Three told me 21, and three others told me 25. I went with a bank that told me 25 of course, but I strongly recommend that you contact an attorney, whether or not you live in California, to determine which account is the best one to go with.]
5. Dividends: To Cash or Reinvest. I strongly recommend that if the company has a dividend reinvestment plan that you take advantage of it for your child.
Here are a group of companies that you might want to consider getting for your young ones, that are broken down into three categories: stocks for younger kids, stocks for teenagers, and stocks for kids with certain interests.
I have also included is a description of the company’s stock certificate. However, don’t judge a stock by its certificate. [As an example, he old Planet Hollywood shares had a color picture of one of its restaurants, but the company went bankrupt.] Keep in mind that some of these stocks with low market caps are extremely speculative. Do your homework before investing in these; you want the company to be around when your kid’s reach the age of 21.
Stocks for Young Kids
Build-A-Bear Workshop Inc. (NYSE:BBW) features a colorful certificate with bear logo and buttons.
Campbell Soup Co. (NYSE:CPB) is for kids who like their soup, and features a Campbell Soup can.
Walt Disney Co. (NYSE:DIS) features several Disney characters in color.
DreamWorks Animation SKG Inc. (NASDAQ:DWA) features the top of Shrek’s head in color.
Gymboree Corp. (NASDAQ:GYMB) features the company title.
Hasbro Inc. (NASDAQ:HAS) features Uncle Pennybags from the Monopoly game.
Hershey Co. (NYSE:HSY) features Mr. Hershey.
Jack in the Box Inc. (JBX) features an early store, Jack, and a hamburger and French fries in color.
Mattel Inc. (NASDAQ:MAT) features kids playing with Hot Wheels, Barbie, and other toys in color.
McDonald's Corp. (NYSE:MCD) features a hamburger, fires, and two workers.
Tootsie Roll Industries Inc. (NYSE:TR) features a woman between two globes.
Topps Co. Inc. (TOPP) features the company logo.
Wendy's International Inc. (NYSE:WEN) features the company logo, and two globes.
William Wrigley Jr. Co. (WWY) features what appears to be a South American native in headdress.
Stocks for Teenagers
Apple Inc. (NASDAQ:AAPL) features a black apple logo.
Coca-Cola Co. (NYSE:KO) features a reclining woman.
eBay Inc. (NASDAQ:EBAY) features a colorful logo.
Marvel Entertainment Inc. (MVL) features a woman holding a harp.
Oakley Inc. (OO) features a woman with wings.
Pepsico, Inc. (NYSE:PEP) features a woman holding a globe.
Six Flags, Inc. (NYSE:SIX) features the Statue of Liberty.
Sony Corp. (NYSE:SNE) features a woman surrounded by electrons.
World Wrestling Entertainment Inc. (NYSE:WWE) features the big W logo.
Orbital Sciences Corp. (ORB) is for kids interested in outer space and features a view of the solar system in color.
Quiksilver Inc. (NYSE:ZQK) is for kids interested in surfing or snowboarding and features a surfer and snowboarder.
Steinway Musical Instruments Inc. (NYSE:LVB) is for or kids who like playing the piano and features the company logo, and woman with a harp.
Disclosure: The author owns DIS, DWA, MAT, MCD, AAPL, KO, EBAY, and ORB.