Fun with Stock Certificates

When my kids were born, I had the brilliant idea of investing their gift money into individual stocks and having stock certificates issued in their names*. I bought the shares in my brokerage account and requested the certificates from my broker.

Messy Money Stock Certificate FailI decided that this would be a good idea because:

1. Stock certificates are cool.  Not only are they cool but they can be beautiful works of art.  I find the idea of holding certificates romantic and old-fashioned.  (Weird and dorky, I know).

2. Locked in savings.  The kids will have a difficult time trying to sell them before they are adults so the money is locked up for a long time.

3.  Dividend reinvestment plans (DRIPs).  Many companies offer the opportunity to reinvest any dividends in additional shares helping the investment grow even more.

4. Periodic share purchases.  Some companies will allow you to add small amounts to account from time to time to buy fractional shares.  Generally you can make these purchases with very low or no fees.  Some companies will also offer a discount off the market price.

5.  Stock splits are exciting.  The arrival of more stock certificates in the mail is cause for celebration.

~~~ See!  Stock certificates can be fun. ~~~

Stock Certificate Considerations

If you are interested in buying stock certificates for your children, please keep the following in mind:

1. Some companies have stopped issuing paper certificates which saddens me becauseStock Certificates Messy Money I love the paper but most of those same companies will allow you to hold them electronically with their transfer agent.  The transfer agent is a third-party that manages and administers a company’s share registry and investment programs.  Sometimes, through the transfer agent you can invest in a company directly, without the use of a brokerage firm.  If there is a particular company you are interested in investing in, a quick Internet search will help you find the transfer agent and the details of what direct investment plans they offer.  As an example, here is IBM’s program. (Not a recommendation – please do your own research).

2.  If you purchase the shares through a brokerage, your broker may charge you fees to issue stock certificates.  The fees vary but they can exceed the cost of the shares themselves!  The stock will need to appreciate considerably for the transaction to be profitable.  The brokerage may also require oodles of paperwork to issue shares to someone other than the account holder.  They may also require more paperwork to issue shares to a minor.

3.  Investing in stock involves risk, including the risk that the company may cease to operate and the share certificate will be worth zero, zilch, zip or only be valued as a collectible.  (See photo at the top of this post – that certificate belongs to my son). Messy!

*Tax laws and Securities regulations change and vary by jurisdiction.  Please verify based on your own situation.
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21 Comments


    1. Thanks – I was hoping someone would get a laugh at it. Haven’t showed it to the kids yet though…. I have given as gifts before to mixed reactions.

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    1. I would love a wall full of stock certificates LOL. Thanks for commenting.

      Reply

  1. Wow! I didn’t know ANY companies issued paper stock certificates anymore! Maybe I’ll have to get a paper certificate for the ONE share of AAPL I own and frame it up. Oh wait, the stock just split so I actually have SEVEN shares now! 🙂
    Al | Saving the Crumbs recently posted…Easy Creamy Vegan AlfredoMy Profile

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    1. It is delightful to get more certificates in the mail when stocks split. I don’t know if Apple is still issuing certificates – but if they are – that would be a great one to have in a frame. Thanks for stopping by.

      Reply

  2. Never considered investing gift money when our kids were young, just wasn’t in that frame of mind financially. Although I wouldn’t invest in individual stocks as a long term plan, it would be cool to have a a few framed stock certificates hanging around.
    Brian @ Debt Discipline recently posted…The Power of the Word “No”My Profile

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    1. When the kids were born they were given some cash – not oodles and oodles – but some and I really didn’t want it to get lost to household spending which sadly is easy for me to do.

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    1. Oh Nortel makes me so angry. What a scandal. My losses are tiny compared to others. I am glad you came by.

      Reply

    1. Their days are numbered I think – and some are worth more as a collectable than the underlying stock. Thanks for stopping by

      Reply

  3. I share your love of stock certificates as fun art… true story, I have Apple stock certificates framed in my house (#nerdalert)! I like it because it’s much more difficult to sell and make the quick buck, which is how I feel stock investing SHOULD be!

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    1. I would love to have some apple certificates! Lucky you.
      Thanks for co-hosting #finsavsat

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    1. For certificates it can be complicated and depend on the broker you are dealing with. I have not had a problem but I think they could refuse to register in a minor’s name without a trust. The taxman may ask me to take the gains one day. I am dealing with such small quantities thought that it does not keep me up at night. I am not aware of if/how you could hold certs in a registered saving plan.

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      1. Oh, no, I don’t think you could. Interested in how they effect FAFSA calculations for EFCs independent of that. They may not even come into play…I’ve never had to fill out an asset section on there before, but that doesn’t mean they don’t have one. They might, I just sadly have never had anything to put down. :p
        femmefrugality recently posted…What is a Family Savings Account?My Profile

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    1. Thanks – they enjoy it and hope they will grow up to be financially astute.

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  4. I think I’d be kind of nervous about investing in individual stocks for my kids, but I do think something like a market index fund isn’t a bad idea.

    Paper stock certificates ARE really cool – especially the Disney kind. I think I’d want to frame mine or something though.
    Mel @ brokeGIRLrich recently posted…Financially Savvy Saturdays #54My Profile

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    1. Yes it is risky. The bulk of their educations savings are in mutual funds. (the only way to invest in stock that their plan allows).

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