Dear Dr. Per Cap:
My niece recently paid off her student loans and is really excited about her finances. Do you have any suggestions for a cool financial themed Christmas gift?
Signed, Auntie Santa
Dear Auntie Santa
Ho, Ho, Ho! I have the perfect gift idea for your financially savvy niece – stock in her favorite publicly traded company. Thanks to a growing number of companies who participate in Direct Stock Purchase Plans (DSPP’s) it’s really easy to gift stock shares these days.
Rather than go through a third party broker, who might require a large minimum purchase or a specialized trading account to purchase stocks on an exchange, DSPP’s allow personal investors to purchase stock directly from a company. A popular stock transfer agent that manages DSPP’s on behalf of hundreds of publicly traded companies is Computershare. Check them out on line. Many big name blue chip stocks like Coca-Cola, Walmart, Amazon, and Alphabet aka Google are available at Computershare with initial investments as low as $25.
I recommend picking a company your niece has a connection to. For example, does she wear The North Face gear? The North Face along with Timberland, Vans, and Dickies is one of thirty brands owned by VF Corporation. Its ticker symbol is VFC and shares currently trade for about $90.
Maybe she loves Starbucks coffee. The only thing hotter than a Caffe’ Americano is Starbucks stock price. It trades under the symbol SBUX for about $85 a share which is up a whopping 800% over the last ten years!
Be creative and pick a stock she will enjoy owning and learning about. Is she a pizza lover? Think Domino’s or Papa John’s stock. If she’s a movie buff how about gifting her some Netflix or Disney stock? Or maybe she’s caught on to the meal subscription craze. If so, Blue Apron is publicly traded. Unfortunately, its stock is a bit of a dud though – down 71% since February 2019 but don’t panic. Your gift is more about turning her onto the exciting world of investing as opposed to making a quick buck in the stock market. And besides even if a stock like VFC takes a nose dive down the chimney, it’s still probably going to hold its value better than a $100 The North Face hoodie!
This gift also doesn’t have to crush your pocketbook. Many stocks trade under $100 but for those that have a higher price tag, like Alphabet which trades for over $1,200, just purchase a portion of one share. You also don’t need to buy an exact number of shares so don’t stress the math.
After you choose a stock, review its plan for the minimum initial investment and related fees. You can then either buy shares directly in your niece’s name – in which case you’ll need to tell her in advance because you’ll need her social security number. Or simply buy them yourself and transfer them to her online later.
One more thing to know about buying stock – you won’t get a classic engraved stock certificate to give her on Christmas morning. Unfortunately, those old school stock certificates have gone the way of rotary phones and steel lunch boxes because now most companies only issue shares electronically. However, you can always create and print your own “souvenir” certificate on a computer. Tie it with a bow along with a company gift card, if the stock is a retailer or restaurant brand, and Auntie Santa will be cooler than a late night serving of milk and cookies!Ask Dr. Per Cap is a program funded by First Nations Development Institute with assistance from the FINRA Investor Education Foundation. For more information, visit www.firstnations.org. To send a question to Dr. Per Cap, email askdrpercap@firstnations.org.