Jeanette A. Tucker | 12/18/2007 2:43:43 AM
Have you ever searched the stores looking for the latest “must have” toy or gadget for the children in your life? A better idea is to give a financial-related gift, according to LSU AgCenter family economist Dr. Jeanette Tucker.
“A gift that teaches the importance of sound financial management can provide valuable lessons that will serve kids for years to come,” Tucker says.
Experience is a great teacher when it comes to teaching children about saving and investing, according to the family economist. One or more shares of stock in the company that makes the “got-to-have” item the school-age child or teenager wants can provide a meaningful gift and a valuable education. You can supplement the gift with a lesson on how to track the stock’s performance in the newspaper or online.
Children cannot purchase or own stocks in their own names, but you can purchase the shares in your name through a custodial account set up under the Uniform Transfers to Minor’s Act or Uniform Gift to Minor’s Act. The investment is held in the adult’s name in custody for the child until he or she reaches the age of majority.
It may be expensive to purchase less than a round lot (100 shares) in a company, but some companies will sell you their stock directly (direct purchase plans); that is, without a broker, thereby eliminating a brokerage fee.
Dividend reinvestment plans (DRIPs) permit current stockholders to purchase additional stock from the company without a broker. An extensive list of companies offering DRIPs and direct purchase plans (DPPs) is on the Internet at http://www.wall-street.com/direct.html.
One Share of Stock Inc. (http://www.oneshare.com) sells single shares of stock in certificate form that can be framed. More than 90 companies are listed, including Coca-Cola, Microsoft, Disney and other companies children may know.
Some companies offer mutual funds geared to children. These funds invest in child-friendly companies and send their young investor educational materials that teach them about investing. These plans typically offer lower minimum opening deposits and target long-term growth.
Of course, U.S. Savings Bonds are available. The Series EE Bonds remain one of the safest investments, and there is never a fee for buying or redeeming them, according to Tucker.
Paper bonds may be purchased at half of their face value in denominations as low as $50, and federal income taxes on earnings may be deferred until the savings bond matures or is redeemed. These bonds may be purchased at your local financial institution or online at http://www.savingsbonds.gov/.
The family economist says you also can find books, videos and board or computer games that help children learn about savings and investments. Financial management software or a session with a financial planner is an excellent gift for grown or newly married children.
For related family economics and consumer topics, click on the Family and Home link on the LSU AgCenter homepage at www.lsuagcenter.com. For local information and educational programs, contact an extension agent in your parish LSU AgCenter office.
On the Internet: LSU AgCenter: www.lsuagcenter.com.
On the Internet: DRIPs & DPPs companies: http://www.wall-street.com/direct.html.
One the Internet: One Share of Stock Inc. http://www.oneshare.com.
Contact: Jeanette Tucker (225) 578-5398 or Jtucker@agcenter.lsu.edu.
Editor: Mark Claesgens (225) 578-2939 or email@example.com.