Instead of giving a gift that will end up in some garage sale in two or three years or a gift card that will enable the recipient to purchase an item destined for the same fate, consider giving stock as a gift. Stocks hold their value better than more traditional gifts and even have potential to increase in value.
Here are 7 ways to give stock as a gift:
SparkGift is an online service that enables you to buy individual stocks as gifts. The site advertises that you can send a stock gift certificate in under a minute, which makes it great for a last-minute gift. Besides stocks, you can use SparkGift to give shares in index funds. You can make a gift to a minor; however, you will have to include the parents’ names on the stock certificates.
SparkGift’s real standout feature is that it lets you give a gift of fractional shares. This outstanding option allows you to limit the dollar amount of the gift, even if the price of the stock you want to purchase is well above that limit. You can buy a stock, or part of a stock, for as little as $20, and the fee is just to $2.95, plus 3% of the cost of the security. (There are no fees payable by the recipient of the gift.)
You can choose from among more than 6,000 stocks and index funds to gift. You provide the name and email address of the gift recipient, and the platform creates the gift certificate and notifies the recipient. To access the investment, the recipient will need to open a brokerage account with SparkGift’s partner, Folio Institutional.
StockPile is another online service for buying individual stocks as gifts. As with SparkGift, you can actually purchase fractional shares with this service. They actually issue the stock in the form of a gift card, which includes both the name of the company and the dollar amount of stock purchased in that company. You can give stock as a gift either by creating an online e-gift, or by purchasing a plastic card. The e-gift is automatically sent to the recipient by email, but you can give the plastic card just as you would any other type of gift card.
Once the recipient receives the gift card, they’ll visit StockPile, enter the gift code, and sign up for the service. Then, they’ll actually receive the stock or fractional share. The recipient even has the option to make a free switch to a different stock, if they prefer.
StockPile charges the buyer $1.99 plus 3% of the value of the gift card purchased.
As a gifter, you can sign up for your own StockPile account in minutes, and even buy and sell stocks within your account. There is no monthly fee and no account minimums. StockPile charges $0.99 to buy or sell a share of stock for your own account.
GiveAShare works like the above online stock gift services, except that it’s something of a boutique option. It offers a limited number of high profile stocks, including AT&T, Apple, Bank of America, Boeing, Citigroup, Coca-Cola, Disney, Exxon, Facebook, GE and other household name corporations. In addition to these stocks, you can also order other stocks that are not on the list through the custom stock page.
And in addition to individual stocks, GiveAShare also offers gift certificates for stocks. The interesting twist here is that those gift certificates can either provide the recipient with a specific stock, or provide the option to buy the stock of their own choosing up to the amount of the gift. Gift certificates can be either printed for physical delivery, or emailed to the recipient. You also have the option to have the stocks delivered in quality frames and mats, or even in engraved plaques.
Each company’s stock has a minimum purchase amount. The lowest minimum is $40, while the highest is $1,452 (that’s for the purchase of Google stock). And this service is more expensive than the others, even if you don’t count the minimum purchase amount.
For example, if you purchase a stock in a cardboard frame, you will pay a fee of $39, plus $1 for the cost of the frame, for a total of $40, over and above the cost of the stock. A custom frame holding the stock will cost $43, plus the $39 fee, for a total cost of $82 over and above the cost of stock itself. It also does not appear that the service offers the ability to buy and give fractional shares.
UniqueStockGift is much like GiveAShare in that it’s more of a specialized service. The site’s gift share options are limited to about 100 stocks, but you can customize the presentation and delivery based on certain events, such as birthdays, holidays, baptisms, bar mitzvahs, and weddings.
Unlike the other gift stock platforms on this list, UniqueStockGift is not a registered brokerage firm or securities dealer. They are simply a platform to turn stocks into memorable gifts. However, the stock certificates you purchase are real, and you will need to provide a Social Security number and other personal information to register the stock.
UniqueStockGift charges a transfer fee, which varies depending on the stock itself. For example, a single share of 1-800 Flowers has a transfer fee of $8; but the transfer fee on a share of 3M is $160. Some of that fee is determined by how much the company issuing the stock charges UniqueStockGift in order to create the certificate.
Computershare is a well-respected stock certificate source that has been around for decades. It provides you with an option to purchase stock directly in companies, but avoids the complications that can come with a direct purchase. Computershare enables you to purchase individual shares in hundreds of companies.
Not only can you purchase shares through Computershare, but it can also act as custodian for the shares. When the time comes, you can also sell shares through the platform. Computershare enables you to participate in dividend reinvestment plans, commonly known as DRIPs.
You can purchase individual stocks, but each stock may have a minimum investment amount. Depending upon the stock, that minimum can be anywhere from $0 to $1,000. Fees charged for individual shares vary from company to company, as well
For example, there may be a market order sale fee of $25 for a particular stock. But that fee can change with different stocks. There may be additional fees, such as an initial setup fee, a market order processing fee, or a batch sale processing fee.
Because of fee levels, it may be best to purchase gift stocks through Computershare only if you plan to purchase more than one stock. That said, Computershare is one of the most popular vehicles for purchasing and selling individual stocks without the services of a broker.
6. Buying Through Online Brokerage Firms
Buying individual stocks through online brokerage firms may be possible, but is not always practical. Online brokers, or discount brokerage firms, are able to charge very low transaction fees because the trading process is highly automated. Paper stock certificates to give as a gift simply don’t fit well into that automation.
The fees for making such a transaction are likely to be prohibitive—probably more than the cost of the share itself. It is also likely that you will need to have active account already in order to make the trade. That said, check with your broker to see if they offer the purchase of individual paper certificates for third parties. You may be pleasantly surprised.
7. Buying Stock Through the Issuing Company
Some companies do enable you to purchase individual stocks directly from them. This is typically limited to larger companies, though. The biggest benefit is that companies that sell their own stock directly typically don’t charge buyers any fees. And many will also buy the stock back when the recipient is ready to sell.
Some companies also offer DRIPS, so that dividends paid on the stock will automatically be reinvested in more shares (or fractional shares) of the stock. This is an excellent option for stock in large, well-established companies that the recipient is likely to hold onto for many years.
In order to find out if a company will enable you to purchase stock directly, check out their website, and look for a page called investor services, or something similar.
It may be less expensive to purchase shares directly through the issuing company, but it may also be worth paying a little bit more for the streamlined process that’s offered by the gift stock companies listed at the beginning of this post.
Have you ever tried to gift individual stocks? What obstacles did you run into?Topics: Investing