Disney Stock for my Kids

WLVRYN · #1 11-22-2007, 12:00 AM

So my parents decided that my kids have enough toys and they want to buy some shares of Disney stock instead for birthdays and Christmas. It will be in pretty small blocks (like probably 5-10 shares at a time for birthdays and Christmas for each kid). I have a brokerage account for myself, but the transaction fees seem like they'd outweigh much of the benefit of getting the stock in such small blocks.

Has anyone used Sharebuilder for something similar that they would recommend for small purchases like that? I can do direct purchases through Disney, but the minimum to open an account is $1,000 which is probably more than we wanted to start the accounts with (not to mention that limits us to only buying Disney stock through the program in case we ever wanted to diversify the kids investments later on).

Any help or suggestions would be appreciated.

Grizwold · #2 11-22-2007, 02:12 AM

Hi WLVRYN,

Since your kids have so many toys, I'll assume they are pretty young. Practically, it is important to consider the transaction fees. Since your parents are making the purchases, you should not be so worried. I believe the spirit of the gift is to teach your kids about investing, and not necessarily making good investments. It is just an introduction for your kids. As long as your parents know that the transaction fees will eat up a lot of the potential profit, you should not be concerned about the negative effect of multiple small purchases. Apparently, your parents are educated investors, and most likely know the effect of transaction fees. You should see this as an opportunity to teach your children about investing, not as an opportunity to realize abnormal or normal profits. Part of the lesson can be about the effect of transaction fees. Anyway, 5-10 shares of Disney is about $150~300. The fee may be as small as 2~3%, but as high at 10%. That's pretty big, but not that big... It's not like paying a 10% fee on a $10,000 transaction. I'd say forget about the fee for now. Teach your kids about the fee later.

Clark

Moseley · #3 11-22-2007, 11:06 AM

Are you sure you want to bet on FL being above water, and CA not crumbling under an 8.0 earthquake within the next 25 years? [img]/images/graemlins/grin.gif[/img]

emon87 · #4 11-23-2007, 05:43 PM

Just open accounts for them at cheapo brokerages like zecco.com.

dazraf69 · #5 11-24-2007, 05:15 PM

OP,

Let me know what you come up with. I actually like this idea very much. I have two nieces that are spoiled brats [img]/images/graemlins/confused.gif[/img]and I think something like this will perhaps help them take perspective. I will be looking into the zecco idea as well.

WLVRYN · #6 11-25-2007, 12:29 AM

My mom is stuck on the Disney idea, so I think that what she's going to do. We're each going to kick in $500 for each of them to get the accounts open and I probably wont put in anything more than that in Disney. They're still pretty young (4 and 2), so they have no idea what they're getting at this point anyway. I'll do a Zecco or Sharebuilder account in the future if I want to get them going more in investing. For now most of the money I have to invest for them is going into their 529 plans.

emon87 · #7 11-25-2007, 01:17 AM

When you open the accounts for them you should put the $500 into something more sensible than one stock...

VTSMI sounds excellent.

Jimbo · #8 11-25-2007, 01:29 AM

[ QUOTE ]
When you open the accounts for them you should put the $500 into something more sensible than one stock...

[/ QUOTE ]

If you are thinking sensibly why buy them toys? They just break them, lose them, give them away or get tired of playing with them. Same for designer jeans, not sensible. Buying Disney stock to hold for 15 years seems pretty sensible to me.

Jimbo

emon87 · #9 11-25-2007, 01:38 AM

[ QUOTE ]
[ QUOTE ]
When you open the accounts for them you should put the $500 into something more sensible than one stock...

[/ QUOTE ]

If you are thinking sensibly why buy them toys? They just break them, lose them, give them away or get tired of playing with them. Same for designer jeans, not sensible. Buying Disney stock to hold for 15 years seems pretty sensible to me.

Jimbo

[/ QUOTE ]

what? That analogy doesn't make sense.

I was just suggesting that since his mom is going to be buying a lot of Disney no matter what, why not get some diversification in with his share? Then he will have both the novelty of Disney for the kids when they are old enough to understand what a stock is and a more reasonable portfolio for them.

WLVRYN · #10 11-25-2007, 01:45 AM

My kids will be more than well off, and two $500 investments are not going to make or break their financial future, so I'm not too worried about putting $500 into one stock for them. They already have 529s and mutual funds in their names (through Vanguard), but no individual brokerage accounts. I was just trying to do it in a way to minimize the fees and hassle since we'd probably only be buying small blocks of shares. And it will be kind of cool when we go to Disneyland next year to tell them that they own part of it.