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Buy Stock Gift Cards [BETTER]
Would you like to give shares of stock in companies such as Apple (AAPL 1.56%), Walt Disney (DIS 2.07%), or Tesla Motors (TSLA 6.24%) to certain kids or adults on your holiday shopping list if the process of buying stock for someone else was simpler?
buy stock gift cards
Who are the companies "hawking" these new stock gift cards?Stockpile, which recently raised $15 million in Series A funding, is a 5-year-old licensed stock brokerage firm that operates entirely electronically. The Silicon Valley-based company has been selling virtual stock gift cards online for about a year, and began rolling out its physical cards to retail outlets in October.
California-based Blackhawk Network (NASDAQ: HAWK) is Stockpile's retail distribution partner. Blackhawk, which began as a division of grocer Safeway, is a leading supplier of the ubiquitous gift cards displayed in retail locations everywhere. Safeway fully divested of Blackhawk Network beginning with a 2013 IPO.
What benefits do stock gift cards -- and Stockpile's trading platform -- provide?Stock gift cards simplify the process of buying stock for someone else, especially a minor. The idea for these cards came to Stockpile co-founder and CEO Avi Lele when he wanted to buy stock for his nieces and nephews, but didn't do so because he'd have to obtain their Social Security numbers and open custodial accounts for them. With a Stockpile gift card, the recipient can turn it in for the stock the buyer chose, or for a different stock or ETF, or for a retailer gift card. When kids or teens set up a Stockpile account, they can own stock by having an adult on the account with them.
Stock gift cards -- along with Stockpile's trading platform in general -- allow for broader access to stock investing because they allow people to buy fractional shares in a company. Additionally, Stockpile doesn't have a minimum amount required to open an account, or a minimum account balance necessary to avoid monthly fees. Apple stock before its 7-for-1 split in 2014 provides a great example of the fractional share issue. The stock closed at $645 per share on the trading day before this split, so even $500, an ultra-generous gift, wouldn't have allowed you to buy a share of stock in the iPhone maker.
Stock trades for $0.99 are a great deal, with the critical caveat that you, or the recipient of your stock gift, don't buy and sell in very small dollar amounts. There appear to be no "hidden" fees, per my perusal of the company's fee schedule.
What's the best way to use stock gift cards?While this is a subjective question, it's best to give stock gift cards just as you would other prepaid gift cards for things like apparel or restaurants. There are fun and educational possibilities for personalizing your gift. For instance, if your niece loves Pixar's animated films, you could give her a DVD of Finding Nemo -- or just a picture, if that's more within your budget -- along with a stock gift card for Disney, which owns Pixar.
Is there a way that I should not use stock gift cards?Yes. Buying stock for yourself via either physical or online gift cards would be foolish, as you'd needlessly be incurring extra fees. If you want to buy stock for yourself, skip gift cards. Open an account first with a low-commission online brokerage and buy shares directly.
One could also argue that continuing to buy your niece $50 gift cards for additional DIS stock after giving her the initial card, which she and her parents used to set up her account, wouldn't make sense because you'd pay a fee. However, some folks might believe that giving $50 via cash or a check written to her, or her parents, with a note that it's to buy additional stock doesn't have the same delight factor.
Beth McKenna has no position in any stocks mentioned. The Motley Fool owns shares of and recommends AAPL, TSLA, and DIS. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
But you can't order a stock off Amazon, nor will Santa be sliding down the chimney with blue-chip stock certificates. If you want to gift stock to loved one, there are several options, as well as a few important points to keep in mind.
Among the most convenient ways to gift a stock, according to James Royal, author of The Zen of Thrift Conversions and a Bankrate analyst, is via a gift card. "Stockpile allows you to buy a gift card for a stock and then the recipient redeems the gift card for ownership."
With a Stockpile gift card or e-gift card you can give between $1 and $2,000 to buy shares, or fractional shares, of a stock. Your recipient can then redeem the gift card and create an account with Stockpile.
If the recipient has the same brokerage firm as the sender, the process is as simple as transferring shares electronically. However, if the recipient is outside of the sender's brokerage firm, Royal says it will take more time to get the gift set up. "You'll need information like their Social Security number, account number, and name. Obviously, this is all very sensitive information and needs to be handled with care. You can't surprise someone with this sort of gift," he said.
For anyone wishing to give over $15,000, you will incur a gift tax. If you are looking to transfer a substantial amount, you might want to consider a trust. A trust will allow you to postpone the recipient's access and ensure that the money will be used for its intended purpose.
Royal noted that those wishing to give the gift of market wealth can also donate stock to charities. "Someone can donate the appreciated value of a stock(s) and avoid taxes while the charity gets the full value of the stock. Everyone wins in here."
Stock can be the gift that keeps on giving, appreciating in value well beyond the initial gift amount. And it can still be quite valuable long after a typical birthday or Christmas gift has been thrown out or spent.
Stock gifts have long been part of the model of Robinhood, a popular investing app, so you may be wondering how to gift stocks on Robinhood. New users may receive a gift of stock when signing up, and you can also earn free stock by referring other users. But Robinhood does not have a feature that allows you to gift stocks to another person. You can instead gift them cash to buy stock via the app themselves. The app does have a crypto gifting feature.
There are other options for gifting stock, though they may require a bit more work. For example, you can purchase a physical stock certificate, though it may take longer to buy and come with additional costs.
You can give stock market gifts to anyone including children, adult family members, spouses, friends and charities. The amount of stock you give may range from fractional shares to investments worth thousands of dollars.
Whereas family members once gave children savings bonds, the concept of stock ownership resonates with people more today, making stocks a popular way to teach children about saving for the future, Gondeck notes.
There can be a tax on stock gifts but they generally only apply to gift-givers. Even then, the gift-giver will only pay taxes if each recipient receives gifts in excess of $16,000 in 2022 or $17,000 in 2023. When the recipient eventually sells the stock, they will need to report that on their tax return.
This does not constitute investment advice. Investing involves the risk of loss, including the potential loss of principal. Brokerage services for US-listed, registered securities available on Public are offered by Open to the Public Investing, Inc. (OTTP), a member of FINRA & SIPC, and a wholly-owned subsidiary of Public Holdings, Inc. Brokerage services for alternative investments are offered by the Dalmore Group, LLC, a member of FINRA & SIPC. Alternative investments are over-the-counter equity securities that have been issued pursuant to Regulation A of the Securities Act of 1933. Cryptocurrency trading is provided by Apex Crypto LLC (NMLS ID 1828849). Apex Crypto is licensed to engage in the virtual currency business by the New York State Department of Financial Services. New customers of OTTP receive free stock valued between $3 - $1,000 (0.3% receive the maximum value).
There are a few ways that you can use a credit card to buy stocks. However, it can be difficult and may not be a good idea even if you're up for jumping through a few hoops. The additional fees you'll pay could start you out in the red. And, if you're being pressured to use a credit card, that's a warning sign that it's a scam.
Most brokerage firms won't let you directly fund your account with a credit card to buy and sell stocks. Instead, you'll have to fund your account in other ways, like a bank transfer, check or wire transfer. There are some creative ways to indirectly use a credit card to buy stock, but the downsides can be tough to justify.
One way you can use a credit card to buy stocks is to purchase a gift card for Stockpile, an online brokerage that lets you buy fractional shares. Gift cards are sold in amounts ranging from $1 to $2,000 and can be redeemed for stocks just like cash. However, you'll pay a fee of $0.99 to $2.99, plus an additional 3% debit or credit card fee for each gift card.
Whether you use a new or existing card, your credit card's balance can have a major impact on your scores. Your credit card utilization ratio is a comparison of your cards' credit limits and balances as they appear in your credit reports. A higher utilization is worse for your scores.
Therefore, if you have a high credit card balance due to a big stock purchase, your credit scores could drop as a result. However, your score could also quickly recover if and when you pay down the balance. Is It a Good Idea to Buy Stocks With a Credit Card?Using a credit card to buy stock generally isn't a good idea. Investing in stock requires taking on the risk of losing money. By buying stock with a credit card, you could wind up with a high-interest credit card balance and lose your investment. 041b061a72