After reading Laws of Finance’s post, Starting Them Off Young today I was curious enough to do some research. LoF wrote a pretty persuasive piece on why stock is a great gift for babies and children. My cousin just had a baby last weekend and we haven’t yet bought a baby gift, so this sounded like a really innovative idea. I googled “buy stock for baby” and lo and behold, someone has created a business to do just that. www.oneshare.com sells stocks as gifts. You purchase one share in your recipient’s name (for gifts to children, their parent must be named as a joint owner) and receive one stock certificate, matted and framed, with an inspirational message. Some of the stocks for children include Pixar, Disney, and Dreamworks. They sell about 150 different stocks in all. The concept is really fun, but it’s also pricey. You pay the going rate for the share of stock, plus a $39 fee, plus around $50 for the frame. This puts the total price of a $25 share at around $115. It’s a good thing the kid has plenty of years for the stock to gain value, because it’s going to take until they’re 105 just to break even! In addition, high-risk/high-return stocks such as small cap companies aren’t offered by oneshare, as they deal in popular large cap stocks. It’s highly unlikely that a single share in a large cap company could become a golden ticket to wealth. So really, these kinds of gifts are more of a novelty than a serious investment.
However, this could be a fantastic investment for two other reasons.
The stock certificates are often lavishly illustrated with characters from the company. I’ve heard that in some cases these “collectible” certificates can be worth more than the stock they represent. A particularly rare certificate could end up increasing in value.
The other way the certificate could be of value is as inspiration. If the parents of the child hadn’t considered making investments in their child’s name, this could be a fun push in that direction. And of course, the framed certificate could inspire the child to take an interest in finance and lead to life of fiscal responsibility. Now that’s a good investment!