Coming up with lovely gift ideas is not always easy. Younger children usually want the latest trend, which they will soon lose interest in, while older peers prioritize buying what they need as they are particularly difficult to satisfy.
In many ways, it would not be a wrong decision if you gifted shares in a company. It might not generate as much excitement as the latest smartphone or a brand new PlayStation. However, in a long-term perspective, it is one of the few things with a real chance of growing in value, converting money into more extra money, and there are few gifts in stores that come with such attributes.
Stocks make great gifts, regardless of the age of the recipient or the occasion.
When choosing the stock, consider the hobbies and interests of the recipient, and then find a company operating within the area with a solid chance of appreciating.
Shares can be gifted through specialist online apps, via brokerage accounts, or in some cases, straight from the company.
If the stock you choose passes your budget, consider buying fractional shares.
Gifting stock might be subject to tax when the recipient finally decides to sell it.
Buying gifts that adults want without a big budget does not seem an easy task, but the stock could help them generate enough funds to purchase the thing they have always wanted. For kids, it’s slightly different because they might not have any long-term dream for which they would be trying to save up. However, that might change in the future, while learning about investing and managing money at early age should help them later in life.
Which Stock to Buy?
There are many companies, so choosing suitable stock needs mindful attention. The aim is to make the gift as profitable as possible, so besides considering the person’s interests, you need to consider the growth potential of the asset as well.
It would be best to first think about what the receiver likes and then try to find a company that operates in that field. Then check its accounts and apply some valuation metrics. You can also speak to an advisor to make sure if it would make a good investment. It would work out better if you make a shortlist of several companies and then analyze them until you find an attractively priced one that can grow in value in some years.
If you need some recommendations, you can take a look at GiveAshare’s choice of stocks:
The Walt Disney Company (DIS)
Apple, Inc. (AAPL)
Manchester United Plc. (MANU)
The Coca-Cola Company (KO)
Virgin Galactic Holdings, Inc. (SPCE)
Nike, Inc. (NKE)
Nintendo Co., Ltd. (NTDOY)
Pfizer Inc. (PFE)
GameStop Corp. (GME)
Starbucks Corporation (SBUX)
You might find it difficult to buy even one share in a company. In this case, fractional shares might be your best option if it is available.
Companies assign a set number of shares when they go public, each representing a portion of ownership. However, sometimes you can buy a slice of one share, called a fractional share, and invest in a given company. Some shares, for example, AMZN (Amazon.com) and GOOGL (Google parent Alphabet), cost more than $2,000 per share.
There are many online brokerages that allow investors to buy fractional shares between $1 and $10.
Suppose you or the person you want to give a present cares about how companies conduct their business. In that case, ESG investments (environmental, social, and governance) should be high on your shopping list. ESG investing involves only buying stocks in companies that prioritize environmental and societal responsibility according to independent third parties. There are three elements that can qualify a company as ESG:
Environmental: (E in ESG) It shows how a company takes care of the planet, including generating energy, treating animals, and disposing of waste.
Social: (S in ESG) how the company maintains relationships with its stakeholders, such as employees, customers, suppliers, and the communities where it functions.
Governance: (G in ESG) how the company operates. That includes the use of accurate and transparent accounting systems, fair executive pay, and a well-balanced board of directors.
In short, the aim is to make money by investing in companies that are environmental-friendly and good for society. However, choosing from the ESG list limits your choice of available investments. But, there is also good news that ESG-based selection will result in investment in companies at a lower risk of damaging their share prices by big scandals.
Where to Buy Stock Gifts
There are several options available for choosing stocks for a gift and giving them to a person. Those options are:
Brokerage account transfer: You can buy the stock with your account and then transfer it to the person you want to give. They also need to have an account. You need to open a custodial account for kids and control it until they hit a certain age.
From the source: Some companies enable you to buy their stock from their website.
Online app: There are plenty of apps include SparkGift, GiveAshare, UniqueStockGift.com, and Stockpile.
Before buying wonderful stock gifts, it’s essential to be aware of any tax bills in the present or future. The IRS – Internal Revenue Service might charge you taxes if the value of a gift is high. The recipient will also have to pay capital gains tax when they decide to cash it in.
The gift tax, a federal tax applied to gifts, will not be an issue for many people. People that plan to give stocks as gifts are not taxed on stock gifts under $15,000 (or $30,000 for couples). Spouses are free from this tax, so if you gift stock to your wife or husband, you do not need to worry about taxes.
In terms of the Capital Gains, the IRS must be notified once stock is sold. In this case, depending on the holding period, the investor (the recipient) will be taxed accordingly.
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