Stocks for grandchild?

Pucks104

Mouseketeer
Joined
Jul 11, 2018
What would be the best way to take the $2400 stimulus check and invest it in stocks for our now 6 years old GD?
 
What a nice thing to do! I don’t know the best way, but please save all paperwork such as dates bought and price. My husband has stocks his grandparents bought him when he was a baby or toddler, but he has no information about exactly when or what they paid. It has caused us so much frustration and the tax implications are confusing.
 
There is no paperwork or stock certificates now days. It is all online. I would just buy the child a S&P 500 index fund from an online brokerage like Fidelity or Schwab.
 
Well ...a Disney stock purchase with subsequent certificate was framed ( by them years back, along with a little plaque) these gifts were given to infants at the time.

In order to get that stock changed to the now adult, ( removing guardian) former gift recipient, they want the framed stock certificate back! Huh?
Thus that guardian will stay on there and it’s never been changed.
So, plan ahead lol.
 


Yeah, that amount of money, it's not worth trying to purchase a few shares of a stock--you're better off with an index fund.

If you feel compelled to buy a specific stock--Disney or Coca-cola or something, because you think she'll like that particular company--go with an online trader that charges minimal fees. The days of fancy stock certificates and needing to save proof/date of purchase stuff is over, thankfully. It was a real pain in the butt if, say, you had a stock purchase plan through work, so you were buying shares of GE or whatever, a little each month, and eventually wanted to sell them.
 
What a nice thing to do! I don’t know the best way, but please save all paperwork such as dates bought and price. My husband has stocks his grandparents bought him when he was a baby or toddler, but he has no information about exactly when or what they paid. It has caused us so much frustration and the tax implications are confusing.

When you file your taxes, you just put undetermined as the acquisition date. We have had to do this alot with gifted stock over the years. We have had to pay more capital gains tax over the years if you don’t know the exact purchase price of the stock.

OP, set them up a brokerage account with Schwab or TD ameritrade. You can set up an account for $1000, a year less. Put them in a nice index fund and forget about it. I would not make it a UGMA unless they force you to. It creates a lot of headaches for the child in the future :)
 


What about a “529” college savings plan? The contribution you make may be tax deductible in certain states for state income tax purposes.
 
What about a “529” college savings plan? The contribution you make may be tax deductible in certain states for state income tax purposes.
I considered that but i decided I wanted to give her some flexibility in how she might want to use this money at a future time.
 
When I bought my Disney stock, there was a provision that if I bought $1000 worth, there was no % fee. I wonder if they have that now, or if we could buy stock for free if we have a financial advisor.
 
When I bought my Disney stock, there was a provision that if I bought $1000 worth, there was no % fee. I wonder if they have that now, or if we could buy stock for free if we have a financial advisor.

The big brokerage houses, Fidelity, Schwab, Vanguard, have eliminated stock commissions. You pay nothing to buy/sell.
 
Please take a second look at the 529 edu fund and talk with a professional. There is FLEXIBILITY for her!!! Our GS graduated from high school last year and we took cash out of his edu fund for on the ground education: a month in Europe. The 529 rules don't consider travel as legit education (duh). For non-legit withdrawals you or she should only be paying income tax on the pro-rated interest earned ... a small price to pay. She could use the funds to open her own business or spend a couple of months at WDW. PLEASE Consult a Professional ~ which I am NOT.
 
Please take a second look at the 529 edu fund and talk with a professional. There is FLEXIBILITY for her!!! Our GS graduated from high school last year and we took cash out of his edu fund for on the ground education: a month in Europe. The 529 rules don't consider travel as legit education (duh). For non-legit withdrawals you or she should only be paying income tax on the pro-rated interest earned ... a small price to pay. She could use the funds to open her own business or spend a couple of months at WDW. PLEASE Consult a Professional ~ which I am NOT.
I will look at the 529 program again before making a final decision. Thank you
 

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