Giving Stocks as a Gift

When I was growing up in the 1980’s, it was common to receive an EE Government Savings Bond for a gift.  My relatives would get them for me for my birthday when I received a sacrament at church, or for a holiday gift.  At the time, I would have much preferred a video game or almost anything other than a Savings Bond.

Looking back, my relative’s choice in gifts had my best interest in mind.  An EE Government Savings Bond was a prudent gift idea at the time.  Video games, toys, or even clothes wear out.  An investment, however, will grow in value.  It will provide the recipient with an even greater gift in the future.

As a Personal Finance Blogger, I have reflected on those EE Bonds that I received and wished that they were shares of individual stocks or an index fund that has a historical rate of return of 10%.  Many of these EE Government Savings Bonds that were purchased for me in the 1980’s had an interest rate of 6%.  Today, however, EE Government Savings Bonds only pay 3.5% if you hold them for 20 years.  I often wondered why more people do not buy shares of stocks or mutual funds as gifts for their young relatives or even other adults?  The best answer to that question is that it was once complicated to set up an investment account for another person.

There is now an easy way to purchase shares of stocks or ETFs as a gift for other people and even children under the age of 18.  The company that made this possible is called Stockpile.  Stockpile allows people to go online and purchase a gift card that is redeemable for shares of a publicly traded stock or an ETF.

Physical gift cards are sold in values of $25, $50, and $100.  E-gift face values can be any dollar amount up to $1000.  There are gift cards for shares of Facebook, Google, Nike, Amazon, and many other companies.  My favorite option is that there are gift cards for shares of ETFs from Fidelity, Charles Schwab, and Vanguard.

There are different ways to purchase gift cards from Stockpile.  A physical gift card can be purchased online or from the gift card rack at supermarkets or other retail stores.  There is the option to purchase an e-gift.  There is also an option to purchase stocks or ETFs for yourself.

Stockpile makes it easy for a minor to be able to own shares of stock or ETF.  If a gift card is purchased for a minor, an adult must be named on the account with them.  Minors can place a trade that goes to a parent/adult for approval.  The minor simply is named as the beneficiary until they reach the age of 18.

After reviewing Stockpiles website, the fees are fair considering the option of being able to now give the gift of stocks to another person with ease:

For an e-gift of stock: $2.99 for the first stock + $.99 per additional stock + credit/debit card fee

For a physical gift card: $4.95 to $7.95, depending on the face value of the gift card

For yourself: If you pay with cash, trades are only $.99, If you use credit $.99 plus 3%

For those who receive the gift card: Free to redeem, link to a bank account, switching to a different stock when redeemed, or re-gifting

After doing some research, Stockpile has received mostly strong reviews.  Consumer Reports, a source that I trust, stated that merging stocks and gift cards was a good idea and that it can have an impact on Kids.  Reuben Gregg Brewer from Seeking Alpha gave Stockpile a less favorable review because of the fees compared to what brokerage houses now charge.  Those brokerage houses, however, do not offer the ease of being able to simply gift a few shares of a stock or ETF to another adult or minor.

In my opinion, I like that Stockpile makes it easy to give the gift of stocks or ETFs to others.  A close friend of mine is expecting to have his first daughter in the next few weeks.  I purchased a gift card for the Vanguard 500 ETF as a gift for his daughter.  It will not mean anything to their little girl after she is born, but I bet she will be happy when she turns 18 and takes ownership of those shares.  I intent was to get her on the path to financial independence from the start of her life.

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Please remember to check with a financial professional before you ever buy an investment and to read my Disclaimer Page.

4 thoughts on “Giving Stocks as a Gift

  1. Millennial Money Club

    I’m a big fan of giving investments as gifts. In fact, I used to give my parents and siblings stock gifts for special occasions such as birthdays or Christmas.

    But then I got sick of paying commissions, so now I just set up LendingClub accounts for them and deposit money into their LendingClub accounts when I want to give them a gift.

  2. Mustard Seed Money

    Stockpile is a really interesting concept that I hadn’t heard of before. It seems like the perfect gift especially if you can’t afford a full share. I’ll definitely have to look into this. Thanks for sharing!!!

  3. DivHut

    I always thought that investments as gifts were a great idea. For two of my close friends I bought stock for their weddings through Sharebuilder. When baby DivHut was born a couple years ago I opened a custodial account for him and have slowly been adding dividend growth stocks to his portfolio. Bottom line, investing can make a great long term gift, especially for a young child that has the long term benefit of time. Too bad Loyal3 closed down. They were great for people starting out in the investing world.


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