Teaching kids about Stocks

[BigRed]

My FIL is giving my son (6) a gift to teach him about the stock market.  He wants to get him an individual stock, so my son can learn about how the market works, follow it, etc, and have it tied into something close to my son's interests.  My son is very into sports, so my FIL chose Nike.  Individual stocks are not the best investment strategy overall, but I can see the how this is probably a better way to learn about what stocks mean than an index fund, and in any case, it's not my choice, it's a gift.  I'm thinking that the fact the stock bounces around over time without obvious reason might also be a lesson about the intelligence of owning individual stock.

Of course, this being the real world, he didn't actually buy the stock, just told me to go get it, set up a UGMA account and tell him how much it cost to get 6 shares (for the 6th birthday, I guess).  He suggested Nike's direct investment program, through compushare, but the fees there are pretty ridiculous.  Where can I set up a UGMA with only a few hundred dollars and not have all the gains disappear to fees?  It looks like Vanguard requires $3000 minimum for such an account.

[GrowingTheGreen]

Schwab generally has lower investment minimums. Try them. Can't vouch for individual stock fees though. I started out with Schwab for mutual funds due to their lower minimums.

[BigRed]

Thanks.

[dots45]

I will start out and say that I don't know anything about UGMA accounts so I can't speak to that.

But if you are looking to buy individual stocks without fees, I'd highly recommend Loyal3.  There are a few catches in that its only for around 60 or so stocks that participate with them, mainly bigger companies (one of them happens to be Nike which is why I thought of L3).  If you want to buy or sell, they do batch trades once or twice a day for all of their orders so you don't have the option of buying at a specific price point like you would with a traditional brokerage.  That is the main downside in that it could cost you a little in share price in how trades are executed.  BUT, for buying small amounts of a stock that you are going to hold onto for a while, I think it is an excellent option as there aren't additional fees for buying/selling stock.  Saving that $8.95 per trade fee makes it worthwhile to consider buying a small amount of stock.  The minimum purchase order is $10. . I think the positives outweigh the negatives.

For a while they allowed funding via CC and that's how I found out about them. That loophole is now closed, but I still think they are a good option and would use them again if I was looking to invest more in addition to my 401k and Roth contributions, as I like some of the individual stocks they have. 

[asiljoy]

When I was a teenage, my Mom set up a custodial account through Sharebuilder for me, which I guess is now Capital One Investing? not sure when that happened, so I could buy stocks myself (I was and am still a nerd). Not sure if it still works, but trading was cheap at the time and costs were only on a per trade basis. You could buy, let it sit, and let the kid watch what happens.

[Hvillian]

It looks like TD Ameritrade has no account minimum and $9.99 commissions on stock purchases.  I have no experience with them, but it doesn't look like there are any other maintenance or account inactivity fees,

https://www.tdameritrade.com/account-types/education.page