How to give shares as a gift

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If you’re looking for a unique, memorable gift that you can keep giving, shop with your online broker. Stock market gifts can be difficult to wrap, but they can be very valuable.

Beyond theoretical investment gains, equity donations offer practical benefits to both donors and recipients.

“We like the use of stock giveaways for educational purposes,” says JR Gondeck, partner and managing director of The Lerner Group, a financial advisory firm. “It’s a great way to teach the concept of saving, ownership, and discipline, even if it’s a small amount of money.”

Plus, your loved ones may actually prefer this gift over typical gifts like gift cards, clothing, electronics, or toys. In 2021, 65% of Americans said they want investments as holiday gifts, according to a survey conducted by MagnifyMoney.

It’s been a pretty bad year for the stock market, but that means you can give away more stocks at a lower price.

Here’s what you need to know about giving stock as a gift.

How to offer a share

You might be able to buy stock for someone in less time than it takes to shop at the mall. Nevertheless, it is important to first ask yourself some basic questions: to whom are you giving the action? What stock do you want to donate? How much do you want to give?

Determining the “best” stock gift depends on the situation and your goals, says Gondeck. You have several options for offering shares, including:

Virtual transfers

This is one of the easiest ways to give away stock, as long as the recipient has a brokerage account. Once you have the recipient’s personal and account information, you can initiate an electronic transfer by filling out forms through your broker. You can either transfer shares you already own or buy shares in your account and then transfer them to the other person.

Can you offer stock on Robinhood?

Stock giveaways have long been part of the model for Robinhood, a popular investing app, so you might be wondering how to gift stocks on Robinhood. New users can receive a stock gift when they sign up, and you can also earn free stock by referring other users. But Robinhood doesn’t have a feature that lets you give shares to another person. You can instead offer them money to buy shares through the app itself. The app has a crypto gift feature.

Give through an app

Non-investors can also participate in the action. Last year, Cash App unveiled a donation option where users can send stocks and bitcoins to other US-based users – and you can do so even if you don’t own those assets. After entering the amount you want to send and the recipient’s information, you can search for a specific action to give as a gift.

Buy a gift card

Buying a gift card for stock can be worthwhile if you or the recipient don’t have a brokerage account. With Stockpile, you can buy a gift card for between $1 and $200 for a specific stock (like Disney, Tesla, Amazon, and Apple), an index fund, or a cryptocurrency — or let the recipient choose their own investments.

Other ways to donate shares

There are other options for offering actions, although they may require a little more work. For example, you can purchase a physical stock certificate, although this may take longer to purchase and incur additional costs.

Benefits of Donating Stock

Few gifts are likely to increase in value the way stocks can. With just one gift, you could pique someone’s interest in investing and potentially provide them with a long-term source of money. Plus, stock gifts open up bigger conversations with family members, and especially kids, about the importance of investing and generating returns, Gondeck says.

Giving shares is not entirely altruistic, however. It can be a tax-efficient way to transfer wealth to family members, and donating stock to charity could qualify you for tax deductions.

Who can you offer shares to?

You can give scholarship gifts to anyone, including children, adult family members, spouses, friends, and charities. The amount of stock you donate can range from fractional shares to investments worth thousands of dollars.

You don’t have to be an active investor or invest in individual stocks to give stocks as a gift. That said, if you want the lens to be educational, it can help if you are, as you’ll be able to explain the benefits (and risks) to the recipient.

How to gift shares to a child

While family members once gave savings bonds to children, the concept of stock ownership resonates more with people today, making stocks a popular way to teach kids to save for the future, notes Gondeck.

Since children are not allowed to own stocks on their own in most states, you must first open a deposit account in their name where you can buy investments or transfer them to the account. When the child reaches “age of maturity” — 18 or 21, depending on the state — ownership of the account transfers to their name and they can do whatever they want with the assets.

If you don’t want the child to have unlimited access to these assets upon reaching maturity, you can instead create a trust, Gondeck notes. “It sounds complicated, but trusts are much better vehicles for giving money to miners.”

Is there a tax on donations of shares?

There may be a tax on stock donations, but it generally only applies to donors. Even then, the donor will only pay taxes if each recipient receives gifts greater than $16,000 in 2022 or $17,000 in 2023. When the recipient eventually sells the stock, they will have to report it on their tax return.

What are the best stocks to give as gifts?

The “best” stock gift is in the eye of the beholder. Gondeck recommends donating stocks of well-established companies that have a track record of strong performance.

If education is part of your goal with this gift, it can be helpful to give stock in a company your recipient knows well – which is why a Disney stock gift is often given to children and is the perfect gift. highest-ranked stock, according to GiveAShare. Apple, Starbucks, Coca-Cola, Nike and Manchester United are other popular stocks. Whatever stock you ultimately choose, make sure it has long-term growth potential.

Gift alternatives

Stocks are not the only asset ready to be offered. Exchange-traded funds (ETFs) and mutual funds may be offered in the same way as an individual stock, while some people may be interested in offering savings bonds again thanks to lower interest rates. higher. Finally, you can also gift cryptocurrencies in Robinhood, Coinbase, and other apps.

There are a few additional considerations with cryptocurrency donations, and Gondeck cautions that the process can be “much trickier,” so make sure it’s a gift the recipient actually wants.

How to offer shares FAQ

Can you buy shares as a gift?

Yes, you can buy shares as a gift or transfer shares you already own as a gift.

How do you offer a share of stock?

There are several ways to gift someone stock, including through virtual transfers, through an app, and with a gift card.

Can you offer stock on Robinhood?

Robinhood does not have a feature that allows you to gift shares to another person. You can instead offer them money to buy shares through the app itself. The app has a crypto gift feature.

What are the best stocks to give as gifts?

The “best” stocks to give may be different for each donor and each recipient, but you’ll probably want to focus on well-established companies that have a track record of solid performance. Popular stocks include Disney, Apple, Starbucks, Coca-Cola, Nike and Manchester United.

Can you give stocks to a child?

Yes, but since children cannot own financial assets in most states, you must first open a deposit account in their name where you can purchase investments or transfer them to the account.

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