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Answer:
Dear
Sandra,
Yes
you can. What a good opportunity to introduce your
grandson to the stock market. Even though he's very
young, over time you can teach him how to follow the
price of his stock and if you pick one that pays dividends,
how his dividends will add money to his BUYandHOLD
account.
I
suggest that you select stock of a blue-chip type
company whose product your grandson is familiar with
-- a food, beverage or candy company; perhaps a toy,
game or clothing manufacturer. That will not only
make it more interesting for him but also more likely
to keep him involved in the investing and saving process.
Here's
what you need to do...
1.
First of all, you will need his Social Security
number.
2.
Then you must set up a custodial account. Minors
are not allowed to actually own securities but in
a custodial account the shares are held in trust for
the child. You can name yourself the trustee as long
as you are of legal age which in most states is 21.
In some states, however, the legal age is 18. Those
states are: Alaska, California, Kentucky, Louisiana,
Maine, Michigan, Nevada, South Carolina, South Dakota,
Virginia and the District of Columbia. In Alabama
and Nebraska, it is 19.
You
will find detailed information on how to set up a
custodial account at: Family
Investing -- on the left side of the home page.
Then, click on What Is A Custodial Account? Here you'll
find a list of the information you need to supply,
such as your name, address, etc.
$Tip:
While you're in this section be sure to read "Kids
and Investing" by Chuck Carlson.
You
can open an account with $20 or as much as you want.
3.
Next, you must pick a stock. For a list of the over
3,500 stocks you can purchase from BUYandHOLD, click
on Full
List of Available Stocks on the home page. For
research about individual stocks, I recommend using
the weekly reports issued by Value Line Investment
Survey (www.valueline.com).
They're available at most public libraries.
4.
Wrap a present. Kids love tearing wrapping paper
off a box, but because stock certificates are held
"in street name" by BUYandHOLD -- rather than mailed
to you -- you won't be able to gift wrap one. You
can, however wrap the company's annual report -- call
the company's investor relations department and ask
them to send you one. Or, if the company you pick
makes a product that's not too expensive, such as
candy, chewing gum, jelly, cereal, toys, gadgets or
clothing, gift wrap that as a way of making the connection
between the product and the stock.
As
your grandson grows, be sure to set aside time to
teach him how to track the price of his stock, both
online and in the newspaper. Why not get a special
notebook in which he can write down the prices and
value of his brokerage account. If he has a bank savings
account, add that information.
Finally,
if you live near the company's headquarters, plan
on visiting or when you feel he's old enough to understand,
take him to the annual shareholder's meeting.
$TIP:
On your grandson's birthday and at holiday time, instead
of standing in a long line at your local store trying
to figure out what to buy him -- you can simply add
money to his custodial account. Our minimum investment,
after opening an account, is only $20.
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