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How Pick the Best Stocks as a Gift for a Child

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If you want to introduce your kids to the stock market, what are the best stocks to gift a child right now? When buying stocks for a child’s account, it can be good to buy stocks of familiar companies. The companies should have products that the child uses or likes.

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Stocks with dividends can add more value to a child’s portfolio. Although the main concern for most people is to find the best stocks to gift a child, it’s also important to know where and how to purchase stocks for kids.

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Why stocks make good gifts for a child

History shows that stocks deliver better returns on investment than most asset classes in the long term. While common gifts for kids like toys and clothes will break or wear out, a good stock will appreciate in value. Therefore, a stock gift will teach a child about investing and make money.

Best stocks to gift a child

If you want to give stock as a gift to a child, you need to look for high-quality stocks that will resonate with the child. Even though kids like toys, instead of buying a toy, you can buy a toy company's stock. 

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Mattel and Hasbro are some of the best toy stocks to gift a child. The companies pay dividends and have impressive growth prospects. The global toy market is on track to exceed $132 billion in 2027 from $90.7 billion in 2019.

For kids who like playing videogames, you can introduce them to investing with stocks of videogame companies. Some of the best videogame stocks that you can gift a child are Microsoft, Sony, Electronic Arts, and Activision Blizzard. AMD stock is also worth considering. The company supplies the chips that power Xbox and PlayStation videogame consoles. The global videogame market is on course to top $200 billion in 2023 from $159 billion in 2020. 

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Although kids like snacks, instead of treating them to a weekend of snacks, you can help them invest in snack companies. Coca-Cola, PepsiCo, Keurig Dr Pepper, and Kellogg are worth considering when shopping for the best stocks to gift a child.

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Many kids are familiar with fast-food brands like McDonald’s, KFC, and Pizza Hut. Your kids may be excited to own stocks of their favorite restaurant. You could consider McDonald’s and Yum! Brands stocks for your children’s portfolio. Yum! Brands owns restaurant franchises KFC, Pizza Hut, and Taco Bell. All of these companies pay juicy dividends.

If you shop with your kids at Walmart, Target, or on Amazon, you may want to make these stocks part of their portfolio. Disney, Netflix, and Nike also offer products or services that many kids like. The stocks may be worth considering for a child’s portfolio.

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How to invest wisely and generate savings for a child

If you have picked the best stocks to gift a child, how do you buy the stock considering that underage people can’t open a brokerage account on their own? There are several ways that you can go about investing and generating savings for a child with stocks. 

You can open a guardian account for the child. As a parent or guardian, you will manage the account on behalf of the child. However, the best way to invest for a child in the stock market is through a custodial account. You will open the custodial account in the child’s name but manage it until the child attains the age of majority. 

Where to buy stock as a gift for a child

Charles Schwab, Fidelity, TD Ameritrade, Etrade, and Stockpile are some of the brokers with custodial accounts. They may be ideal for individuals looking to invest in stocks on behalf of their kids. The investing app Acorns also has a custodial account.

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