Giving Stock as a Graduation Gift


Q: My granddaughter is graduating from high school and I would like to give her some stock in a company or some shares of a mutual fund as a graduation gift. How do I go about it?

A: What a great idea! By giving shares of stock in a public company you are not only giving her something of monetary value — ownership in a business — but you are also giving a subtle nudge that hopefully will entice your granddaughter to learn more about saving and investing. You can bet that she will begin to follow the price of the stock over the coming years. And in doing so, she will learn how long-term investing can work to her advantage.

Most new graduates know very little about stocks or the stock market and it may be many years before they have the time or the inclination to learn. Graduation gifts are spent or will depreciate in value and eventually become worthless. Stock, on the other hand, is very likely to appreciate over time. I recommend that grandparents consider giving shares of stock in well-established U.S. companies to their grandchildren on various occasions such as birth, birthdays, graduations and marriage.

To give shares in stock or in a mutual fund, your grandchild would need to open an account (a custodial account if they are under 18) at a mutual fund or brokerage firm in their name. Your broker or financial adviser can help. You could then buy the shares in her account or transfer the shares from your account.

The paperwork can take away the surprise, but you could write a note on a card and tell them what you plan to do. You can also give paper stock certificates, but that can be very expensive and impractical in today's electronic world. You direct your broker to buy the shares in your account and instruct him to issue a stock certificate in your granddaughter's name for the number of shares you want to give her.

Be sure to instruct your broker to mail the certificate to you and not your granddaughter if you want to surprise her. Your broker will charge a fee (it could be substantial) for this service, but your granddaughter won't have to open an account. Your broker will probably ask you for your granddaughter's name, address, date of birth, and Social Security number.

Another way to give a share of stock is available on the Internet. There are several websites dedicated to helping you. At least one site offers framed certificates. It can take anywhere from four to six weeks to get the certificate after you order it, so plan ahead.

This method may be preferable if you don't have a brokerage account or if you want the certificate framed. I can't recommend any of these sites because I have not tried them. The sites I know of are,, and On, grandchildren can register for desired gifts of stock just like they can register for gifts at a department store. offers a way to teach your children about being owners of stock as opposed to just buying consumer goods such as toys. And offers a variety of frames for the stock certificate.

Kenneth B. Petersen is an investment adviser and principal of Monterey Private Wealth Inc. in Monterey. Send questions concerning investing, taxes, retirement or estate planning to 2340 Garden Road, Suite 202, Monterey 93940 or