Investing gift from grandma

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Darth Xanadu
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Investing gift from grandma

Post by Darth Xanadu » Fri Apr 12, 2019 11:21 am

My stepmother has generously offered to gift $1,000 to my daughter when she is born next month, for purposes of funding a UTMA account and purchasing stock in her name. She has asked me to start thinking about what to buy.

She has always been a dividend investor, which is what her father taught her. Her expectation is that I purchase a company that my daughter can be excited about in the future, that they can "connect" over down the road, etc. She made the same offer for my 1-year old son, and I bought 10 shares of Disney (DIS) with her gift.

I'm curious what suggestions others have. Here's my current thinking:

Option A: Buy 10 shares of Disney, same as my son
Option B: Buy 1 share of Amazon
Option C: Buy 1 share of Google
Option D: Other??

In all cases, I'd fund the difference, although since I don't have much extra cash laying around Option D would be cheapest for me.
"A courageous teacher, failure is."

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dm200
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Re: Investing gift from grandma

Post by dm200 » Fri Apr 12, 2019 11:27 am

Darth Xanadu wrote:
Fri Apr 12, 2019 11:21 am
My stepmother has generously offered to gift $1,000 to my daughter when she is born next month, for purposes of funding a UTMA account and purchasing stock in her name. She has asked me to start thinking about what to buy.

She has always been a dividend investor, which is what her father taught her. Her expectation is that I purchase a company that my daughter can be excited about in the future, that they can "connect" over down the road, etc. She made the same offer for my 1-year old son, and I bought 10 shares of Disney (DIS) with her gift.

I'm curious what suggestions others have. Here's my current thinking:

Option A: Buy 10 shares of Disney, same as my son
Option B: Buy 1 share of Amazon
Option C: Buy 1 share of Google
Option D: Other??

In all cases, I'd fund the difference, although since I don't have much extra cash laying around Option D would be cheapest for me.
I would go with a Mutual Fund.

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Re: Investing gift from grandma

Post by robphoto » Fri Apr 12, 2019 11:31 am

I suppose shares in a total stock market fund are sensible, but I think the point of this is to own something that the child can picture as a real thing as they grow, so I vote for Disney. You could also ask Grandma what she likes, she might enjoy thinking about it and having her grandchild own something she's chosen.

delamer
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Re: Investing gift from grandma

Post by delamer » Fri Apr 12, 2019 11:34 am

I don’t think you want your kids in different investments, so go with Disney.

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Re: Investing gift from grandma

Post by Wiggums » Fri Apr 12, 2019 11:36 am

100% I’d go with a mutual fund like TSM. The good news is that it includes companies like Disney. So you get the best of both worlds without the single stock risk.

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Re: Investing gift from grandma

Post by Grt2bOutdoors » Fri Apr 12, 2019 11:39 am

Grandma said buy individual stock with the money, therefore all these suggestions to buy mutual funds is off the table.
Buy Disney stock, not because you already own it, but if/when you do go to DisneyWorld you'll see that prospects remain good for that company but use the amusement park as the springboard for further investigation into why it's a good investment for a kid.
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dm200
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Re: Investing gift from grandma

Post by dm200 » Fri Apr 12, 2019 11:43 am

delamer wrote:
Fri Apr 12, 2019 11:34 am
I don’t think you want your kids in different investments, so go with Disney.
OK - I, now, agree.

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Re: Investing gift from grandma

Post by HomeStretch » Fri Apr 12, 2019 11:44 am

1 share of Disney and the balance in a total stock market mutual fund.

As paper stock certificates are no longer issued, Disney stockholders can order a personalized Disney Collectible Shareholder Certificate for a fee. I did this for my child, framed it as wall art, and at age 6 or 7 it started a lot of conversations about the stock markets, etc.

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Re: Investing gift from grandma

Post by RickBoglehead » Fri Apr 12, 2019 11:50 am

My first reaction would be to say "thanks step-Mom, but I'd prefer to fund a 529 for her college, and would be happy to direct your funds to that". However, you already took her money and did it her way for the first child, so that ship has sailed.

Buying individual stocks for HER to make a connection with the child seems silly IMO. And goes against what this forum, and you perhaps believe in for investing, and what you'd teach your child when they are old enough to understand.

Kids don't get the stock market until their teens.
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Re: Investing gift from grandma

Post by cheese_breath » Fri Apr 12, 2019 12:05 pm

RickBoglehead wrote:
Fri Apr 12, 2019 11:50 am
Buying individual stocks for HER to make a connection with the child seems silly IMO. And goes against what this forum, and you perhaps believe in for investing, and what you'd teach your child when they are old enough to understand.
+1
You don't want your children growing up thinking buying individual stocks is the way to invest. Plus who knows what might to happen to DIsney over the next decade or two. Other 'too big to fail' companies did. Talk to grandma and do a little Investing 101 with her.
The surest way to know the future is when it becomes the past.

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dm200
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Re: Investing gift from grandma

Post by dm200 » Fri Apr 12, 2019 12:34 pm

cheese_breath wrote:
Fri Apr 12, 2019 12:05 pm
RickBoglehead wrote:
Fri Apr 12, 2019 11:50 am
Buying individual stocks for HER to make a connection with the child seems silly IMO. And goes against what this forum, and you perhaps believe in for investing, and what you'd teach your child when they are old enough to understand.
+1
You don't want your children growing up thinking buying individual stocks is the way to invest. Plus who knows what might to happen to DIsney over the next decade or two. Other 'too big to fail' companies did. Talk to grandma and do a little Investing 101 with her.
No, I believe a waste of time.

Just put the new money in Disney - Grandma is happy. Trying to "Educate" Grandma may piss her off and no more money!

Use some other money, as becomes appropriate, to educate children in "Investing 101".

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Re: Investing gift from grandma

Post by Goal33 » Fri Apr 12, 2019 12:35 pm

Way too much thinking here. Just buy Disney and move on.
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Re: Investing gift from grandma

Post by delamer » Fri Apr 12, 2019 12:37 pm

cheese_breath wrote:
Fri Apr 12, 2019 12:05 pm
RickBoglehead wrote:
Fri Apr 12, 2019 11:50 am
Buying individual stocks for HER to make a connection with the child seems silly IMO. And goes against what this forum, and you perhaps believe in for investing, and what you'd teach your child when they are old enough to understand.
+1
You don't want your children growing up thinking buying individual stocks is the way to invest. Plus who knows what might to happen to DIsney over the next decade or two. Other 'too big to fail' companies did. Talk to grandma and do a little Investing 101 with her.
The child in question isn’t even born yet and it’s a gift.

The child isn’t going to start trading options as a 30 year old because grandma bought her a few shares of Disney as an infant.

Sheesh...

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Darth Xanadu
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Re: Investing gift from grandma

Post by Darth Xanadu » Fri Apr 12, 2019 12:56 pm

delamer wrote:
Fri Apr 12, 2019 11:34 am
I don’t think you want your kids in different investments, so go with Disney.
Great point, I hadn't considered from that aspect.
RickBoglehead wrote:
Fri Apr 12, 2019 11:50 am
Buying individual stocks for HER to make a connection with the child seems silly IMO. And goes against what this forum, and you perhaps believe in for investing, and what you'd teach your child when they are old enough to understand.

Kids don't get the stock market until their teens.
I'm not really following you here. What's silly about it? At any rate, I'm not turning down the gift, that would only lead to hurt feelings, or worse.
"A courageous teacher, failure is."

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Re: Investing gift from grandma

Post by Grt2bOutdoors » Fri Apr 12, 2019 2:53 pm

RickBoglehead wrote:
Fri Apr 12, 2019 11:50 am


Kids don't get the stock market until their teens.
Bwhaha, is that why my much younger kid asks me to buy stock in Nvidia? Kids get it...believe me.
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Re: Investing gift from grandma

Post by Gill » Fri Apr 12, 2019 2:55 pm

Someone bring me up to date. Where can one open an account for an infant with $1,000 cash and then buy a single stock with it? Now that paper certificates are no longer issued, is the broker going to send out a monthly statement every month for decades showing the single stock held in the account and the quarterly dividend credited to the account? I can't imagine any firm that would accept such an account unless the parent had substantial funds in another account with the same firm.
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Re: Investing gift from grandma

Post by CABob » Fri Apr 12, 2019 3:36 pm

Unfortunately I don't relate too well to new born or unborn children. I do relate to grandmas much better. Therefor I suggest you stick with individual stocks as she requested. As an Option D suggestion I would offer McDonald's. As a young child I submit that they might be more familiar with the Golden Arches than with the Magic Kingdom.
Bob

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Re: Investing gift from grandma

Post by ReadyOrNot » Fri Apr 12, 2019 5:58 pm

I don't get it. Why would she be offended if you choose to get a mutual fund? You aren't rejecting a choice she made. Can't you just say you don't want to avoid big mistakes, don't want to stress over it, and think taking an average result is fine? And this is the second child, so it's like figuring the cheaper diapers are sensible and good enough.
But you know your MIL, so use your judgement.

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Re: Investing gift from grandma

Post by celia » Fri Apr 12, 2019 6:37 pm

I see another potential objective here and that is learning about books/ reading. If grandma or the child will be getting an annual report with pictures in it, it would be great to "read" it with the child. Motley Fool says good stocks for kids are Disney, Hasbro, and Microsoft. Mattel is also a contender for starting to think about where things "come from". The items don't just appear at a store (or amusement park) but are made by a company.

However, these "books" could make the kids become more consumer focused than you might want. You might want to figure out how to address that now, if you go that way. One way might be to think of this as Grandma likes to share these things (rides/amusement park, toys, computers games) with you so you learn about them, not necessarily "own" one.

Note that we no longer get any stock annual reports from stocks held at Vanguard, probably because we turned off paper mailing of annual reports, et al. We own Disney and specifically wanted the annual report because it can be a Disneyana collector's item so I had to buy it at another brokerage company.
Last edited by celia on Fri Apr 12, 2019 6:50 pm, edited 1 time in total.

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Re: Investing gift from grandma

Post by AllieTB1323 » Fri Apr 12, 2019 6:46 pm

CABob wrote:
Fri Apr 12, 2019 3:36 pm
Unfortunately I don't relate too well to new born or unborn children. I do relate to grandmas much better. Therefor I suggest you stick with individual stocks as she requested. As an Option D suggestion I would offer McDonald's. As a young child I submit that they might be more familiar with the Golden Arches than with the Magic Kingdom.
Ha, my DW votes for MCD while I vote for DIS.

In her half or our 5% fun money she holds the "Arches" while I hold the Magic Kingdom.

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Re: Investing gift from grandma

Post by mortfree » Fri Apr 12, 2019 6:59 pm

Apple

LFS1234
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Re: Investing gift from grandma

Post by LFS1234 » Fri Apr 12, 2019 7:28 pm

celia wrote:
Fri Apr 12, 2019 6:37 pm
I see another potential objective here and that is learning about books/ reading. If grandma or the child will be getting an annual report with pictures in it, it would be great to "read" it with the child. Motley Fool says good stocks for kids are Disney, Hasbro, and Microsoft. Mattel is also a contender for starting to think about where things "come from". The items don't just appear at a store (or amusement park) but are made by a company.
All good points.

Mutual funds don't make much sense unless you understand what a stock is. You can work your way up to mutual funds later.

Besides, mutual fund prospectuses make lousy bedtime reading.

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Re: Investing gift from grandma

Post by arcticpineapplecorp. » Fri Apr 12, 2019 8:50 pm

Darth Xanadu wrote:
Fri Apr 12, 2019 11:21 am
My stepmother has generously offered to gift $1,000 to my daughter when she is born next month, for purposes of funding a UTMA account and purchasing stock in her name. She has asked me to start thinking about what to buy.
If she is asking you what you want to buy, then why can't you just buy VT (Vanguard total world index ETF) since you won't have enough to buy VTWAX (mutal fund instead of ETF)?

If she thinks it's a good idea to buy a stock, but can't decide between Disney, Coke, Amazon, Google, Nike, McDonald's, etc. why wouldn't she think it's a good idea to buy them all? Why should you be forced to choose between many quality companies when you can own them all?

Is it better to own one company or 8109 companies of different sizes (large, mid, small) both value and growth, in all sectors of the market (pharmaceuticals, financial, technology, utilities, energy, telecommunications, etc.) in 40+ countries around the world?
Darth Xanadu wrote:
Fri Apr 12, 2019 11:21 am
She has always been a dividend investor, which is what her father taught her. Her expectation is that I purchase a company that my daughter can be excited about in the future, that they can "connect" over down the road, etc. She made the same offer for my 1-year old son, and I bought 10 shares of Disney (DIS) with her gift.
Just because she learned about "dividend investing" doesn't mean she can't continue her learning. You can teach her why total return is more important than dividend investing. You can teach her that high dividend stocks may be a type of value stock but it's better to own a value index fund comprised of hundreds of value companies rather than just one or a few. Some high dividend stocks can go out of business...there goes your dividend along with your principle.

By the way, VT pays a dividend (https://investor.vanguard.com/etf/profi ... butions/vt)

Regarding being excited about a company in the future...there's no way to know what a company will be like in the future. Just because it's an exciting company now, it could become a boring company later on. Besides, is the goal to own "exciting" companies? Some of the best companies have been owned by Warren Buffett not because they're exciting but because they produced steady increasing earnings over time. There are some businesses that people would avoid that have been very profitable (waste removal businesses, etc).

Should she "connect" over a company or not? There are plenty of companies people loved right up until they went out of business. Sears was once mighty (had it's name on the tallest building in the world at one point, the Chicago Sears Tower). Now look at that. And so on.

The goal of investing is to get a return on your investment, not to tell a story.
Darth Xanadu wrote:
Fri Apr 12, 2019 11:21 am
I'm curious what suggestions others have. Here's my current thinking:

Option A: Buy 10 shares of Disney, same as my son
Option B: Buy 1 share of Amazon
Option C: Buy 1 share of Google
Option D: Other??

In all cases, I'd fund the difference, although since I don't have much extra cash laying around Option D would be cheapest for me.
I vote for Option D: Other...buy VT and call it a day.

My 2 cents.
Last edited by arcticpineapplecorp. on Fri Apr 12, 2019 8:56 pm, edited 1 time in total.
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arcticpineapplecorp.
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Re: Investing gift from grandma

Post by arcticpineapplecorp. » Fri Apr 12, 2019 8:54 pm

LFS1234 wrote:
Fri Apr 12, 2019 7:28 pm
Mutual funds don't make much sense unless you understand what a stock is. You can work your way up to mutual funds later.
I disagree. Once you understand what a stock is and you realize you buy so many items from so many companies, how do you just choose one? How do you know which will be the best one going forward? Once you realize there's no way to know and it doesn't matter because I get to own them all by owning the entire market, that makes more sense.

If someone says, "I own Apple" you can say "Me too".
If someone says "I own Google" you can say "Me too".
If someone says "I own McDonald's" you can say "Me too" and so on..

But if someone says "I own McDonald's" and you only own Apple, you can't say "Me too". Will you regret that?
"May you live as long as you want and never want as long as you live" -- Irish Blessing | "Invest we must" -- Jack Bogle

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Re: Investing gift from grandma

Post by Spirit Rider » Fri Apr 12, 2019 9:38 pm

This thread provides more evidence that many Bogleheads are fundamentally perspective challenged.

We are talking about $1,000 people. Not everything in life can be resolved down to TSM.

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Re: Investing gift from grandma

Post by LFS1234 » Fri Apr 12, 2019 9:42 pm

arcticpineapplecorp. wrote:
Fri Apr 12, 2019 8:54 pm
LFS1234 wrote:
Fri Apr 12, 2019 7:28 pm
Mutual funds don't make much sense unless you understand what a stock is. You can work your way up to mutual funds later.
I disagree. Once you understand what a stock is and you realize you buy so many items from so many companies, how do you just choose one? How do you know which will be the best one going forward? Once you realize there's no way to know and it doesn't matter because I get to own them all by owning the entire market, that makes more sense.
I was unclear, sorry. The point I was hoping to make was that from the perspective of a child who doesn't know much if anything about finance yet, I think it make sense to explain what a stock is before you try to explain what a (stock) mutual fund is.

Similarly, In order to explain what a stock is, it makes sense to first explain what a company is. Here, McDonalds or Apple is probably a lot easier to explain to a child than International Nickel or US Filter is.

Once the child understands that a stock represents an interest in a company and that it has a price which fluctuates, the next logical step is explaining the benefits of diversification.

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Re: Investing gift from grandma

Post by Darth Xanadu » Fri Apr 12, 2019 10:39 pm

ReadyOrNot wrote:
Fri Apr 12, 2019 5:58 pm
I don't get it. Why would she be offended if you choose to get a mutual fund? You aren't rejecting a choice she made.
I don't think she'd be offended, I just think maybe disappointed. I don't know, my sense is she hopes one day that the kids see a Disney movie and think of grandma, or their friend get a new iPhone and they can think of grandma. I suppose I can suggest an index mutual fund, but I'm just not sure that's keeping with the spirit in which the gift was made. Are the kids gonna learn about capitalism and think of grandma? Just doesn't feel the same.

I appreciate everyone's thoughts. I'll probably go with Disney for simplicity and since that's what her older brother already owns which as @Delamer pointed out might avoid future drama. As also mentioned, it's only $1k and I don't expect recurring gifts.
Gill wrote:
Fri Apr 12, 2019 2:55 pm
Someone bring me up to date. Where can one open an account for an infant with $1,000 cash and then buy a single stock with it? Now that paper certificates are no longer issued, is the broker going to send out a monthly statement every month for decades showing the single stock held in the account and the quarterly dividend credited to the account? I can't imagine any firm that would accept such an account unless the parent had substantial funds in another account with the same firm.
Gill
I really don't know much about it other than I was able to open a custodial account at Fidelity with no problems in 2017 with about $1k. I do have other assets there. Maybe they waived a minimum, or maybe they don't have a minimum.
"A courageous teacher, failure is."

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Re: Investing gift from grandma

Post by Spirit Rider » Fri Apr 12, 2019 11:47 pm

Darth Xanadu wrote:
Fri Apr 12, 2019 10:39 pm
Gill wrote:
Fri Apr 12, 2019 2:55 pm
Someone bring me up to date. Where can one open an account for an infant with $1,000 cash and then buy a single stock with it? Now that paper certificates are no longer issued, is the broker going to send out a monthly statement every month for decades showing the single stock held in the account and the quarterly dividend credited to the account? I can't imagine any firm that would accept such an account unless the parent had substantial funds in another account with the same firm.
I really don't know much about it other than I was able to open a custodial account at Fidelity with no problems in 2017 with about $1k. I do have other assets there. Maybe they waived a minimum, or maybe they don't have a minimum.
@Gill coming up to date.

With the exception of Vanguard, there are plenty of financial institutions with little to no minimums. I have a Scottrade account with < $10 in it for a decade and still have it after TD Ameritrade acquired them.

Schwab has no minimum to open a UTMA account, no minimum balance required and you can buy one of their index funds for as little as $1.00.

Coincident with the introduction of their Zero Index Funds, Fidelity instituted no account minimums, no minimum balance and no minimum investment for most of their mutual funds.

You could make a trivial investment in a mutual fund and they would both issue statements monthly and issue dividends as necessary.

It's a brave new world.

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Re: Investing gift from grandma

Post by DonIce » Fri Apr 12, 2019 11:51 pm

Gill wrote:
Fri Apr 12, 2019 2:55 pm
Someone bring me up to date. Where can one open an account for an infant with $1,000 cash and then buy a single stock with it? Now that paper certificates are no longer issued, is the broker going to send out a monthly statement every month for decades showing the single stock held in the account and the quarterly dividend credited to the account? I can't imagine any firm that would accept such an account unless the parent had substantial funds in another account with the same firm.
Gill
Plenty of brokers will allow you to open an account with no minimum, no fees, and no stipulation about future activity levels.

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Re: Investing gift from grandma

Post by DonIce » Fri Apr 12, 2019 11:56 pm

Spirit Rider wrote:
Fri Apr 12, 2019 9:38 pm
This thread provides more evidence that many Bogleheads are fundamentally perspective challenged.

We are talking about $1,000 people. Not everything in life can be resolved down to TSM.
+1

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Re: Investing gift from grandma

Post by StormShadow » Sat Apr 13, 2019 12:26 am

Darth Xanadu wrote:
Fri Apr 12, 2019 11:21 am
Option A: Buy 10 shares of Disney, same as my son
Option B: Buy 1 share of Amazon
Option C: Buy 1 share of Google
Option D: Other??
A low cost S&P 500 index mutual fund or ETF would be my first recommendation. Its well enough diversified and given that it follows the S&P 500 it would be a nice way to eventually teach your daughter about the stock market/economy.

If it has to be a single stock, Disney would be my second choice.

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Re: Investing gift from grandma

Post by NYCwriter » Sat Apr 13, 2019 12:52 am

That's one awesome Grandma.

You know what I think? It doesn't make a difference. Okay, Disney, Google, Amazon might go bankrupt, end up like GE, etc. but really, most likely it is probably gonna be better 20 years from now.

SP500 or Total is the most foolproof option. The companies might change, but the market survives.

The best part is the ability to teach financial literacy. "Grandma funded this account, see how it's grown....:

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Re: Investing gift from grandma

Post by zeal » Sat Apr 13, 2019 5:34 am

+1 Disney, or some Disney and the rest in total stock market.

I agree with a lot of other posters--same as the sibling makes sense. Connecting Grandma to the Magic Kingdom is a great idea and they will remember her often. If Disney comes crashing down and they lose the stock, then there's the first lesson on investing in individual stocks. I really like the idea someone else suggested of buying a single share of Disney and putting the rest in a total stock market index fund, but if they only own one share of Disney in this instance, do they lose enough to actually learn this lesson? Maybe $500 in Disney and $500 in TSM and when they're older they'll be able to see and understand the different paths they take--similar growth, more volatility in single stock versus TSM, etc... If you do go with the Disney+TSM option, I would shift the sibling's holdings to match.

Very generous, Grandma! I hope we will be in a position at her age to provide the same gifts for our grandchildren. And I don't mind that she believes in dividend investing--she is plenty wise for understanding that investing at a young age is the important thing. What a valuable gift!

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Re: Investing gift from grandma

Post by Gill » Sat Apr 13, 2019 6:20 am

Thanks all for bringing me up to date on current account minimums. I wasn’t aware accounts with brokers could be opened with so little. In my end of the financial world,which was bank trust operations, minimums have risen to unimaginable levels. Good to know.
Gill
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Re: Investing gift from grandma

Post by elcadarj » Sat Apr 13, 2019 6:33 am

Spirit Rider wrote:
Fri Apr 12, 2019 9:38 pm
This thread provides more evidence that many Bogleheads are fundamentally perspective challenged.

We are talking about $1,000 people. Not everything in life can be resolved down to TSM.
+1

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Re: Investing gift from grandma

Post by Grt2bOutdoors » Sat Apr 13, 2019 8:23 am

Darth Xanadu wrote:
Fri Apr 12, 2019 10:39 pm
ReadyOrNot wrote:
Fri Apr 12, 2019 5:58 pm
I don't get it. Why would she be offended if you choose to get a mutual fund? You aren't rejecting a choice she made.
I don't think she'd be offended, I just think maybe disappointed. I don't know, my sense is she hopes one day that the kids see a Disney movie and think of grandma, or their friend get a new iPhone and they can think of grandma. I suppose I can suggest an index mutual fund, but I'm just not sure that's keeping with the spirit in which the gift was made. Are the kids gonna learn about capitalism and think of grandma? Just doesn't feel the same.

I appreciate everyone's thoughts. I'll probably go with Disney for simplicity and since that's what her older brother already owns which as @Delamer pointed out might avoid future drama. As also mentioned, it's only $1k and I don't expect recurring gifts.
Gill wrote:
Fri Apr 12, 2019 2:55 pm
Someone bring me up to date. Where can one open an account for an infant with $1,000 cash and then buy a single stock with it? Now that paper certificates are no longer issued, is the broker going to send out a monthly statement every month for decades showing the single stock held in the account and the quarterly dividend credited to the account? I can't imagine any firm that would accept such an account unless the parent had substantial funds in another account with the same firm.
Gill
I really don't know much about it other than I was able to open a custodial account at Fidelity with no problems in 2017 with about $1k. I do have other assets there. Maybe they waived a minimum, or maybe they don't have a minimum.
You can open a Disney shareholder account directly with the stock transfer agent but the fees might be steep. Or you can do it directly with Fidelity or Schwab.
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arcticpineapplecorp.
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Re: Investing gift from grandma

Post by arcticpineapplecorp. » Sat Apr 13, 2019 2:46 pm

Darth Xanadu wrote:
Fri Apr 12, 2019 10:39 pm
ReadyOrNot wrote:
Fri Apr 12, 2019 5:58 pm
I don't get it. Why would she be offended if you choose to get a mutual fund? You aren't rejecting a choice she made.
I don't think she'd be offended, I just think maybe disappointed. I don't know, my sense is she hopes one day that the kids see a Disney movie and think of grandma, or their friend get a new iPhone and they can think of grandma. I suppose I can suggest an index mutual fund, but I'm just not sure that's keeping with the spirit in which the gift was made. Are the kids gonna learn about capitalism and think of grandma? Just doesn't feel the same.
I'm sure you will buy Disney because you think it will never go out of business. Many people said the same about lots of other companies. It seems like it can never happen, because of how well a company has been doing but the future is so unknown.

My father put $8000 into a company (in my name) when I was a kid (that was a lot of money back then). Don't you think he put that money in the company he'd think would do the best? If not, and he thought a different company would do better, then he would have put it there instead. So he put it where he thought he'd do the best.

Years later that company went bankrupt and he (or I depending on how you look at it) lost it all. Not just $8000 but what the $8000 would have become if it was invested in the S&P500 index fund with Vanguard (which did exist at that time). I ran the numbers years ago and it would have been worth a lot more than $0.

Now I can look at that and think of Daddy. (fortunately I did get to write off $8000 of ordinary income on my taxes, $3000, $3000 and $2000 over three years)

See what I mean? Grandma isn't thinking about what if the company goes out of business, or doesn't do well and then her grandkid can think of grandma...but not as fondly.

Only 4% of all the companies that existed back to 1926 created all the value of the stock market. Half of the other 96% of all companies back to 1926 did worse than putting your money in a treasury bill:

(source: https://www.nytimes.com/2017/05/12/your ... -wont.html
https://papers.ssrn.com/sol3/papers.cfm ... id=2900447)

Why buy a lottery ticket when you can get the return of the market guaranteed?
"May you live as long as you want and never want as long as you live" -- Irish Blessing | "Invest we must" -- Jack Bogle

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Re: Investing gift from grandma

Post by Grt2bOutdoors » Sat Apr 13, 2019 10:11 pm

arcticpineapplecorp. wrote:
Sat Apr 13, 2019 2:46 pm

Why buy a lottery ticket when you can get the return of the market guaranteed?
There's a saying "don't look a gift horse in the mouth". Would you rather get the gift, even if it were in the form of a lottery ticket or no gift at all?
IMO, the OP should follow the wishes of grandma. At the very least, one should understand the value of the gift is beyond the monetary symbolism, to give is to sacrifice, that is the true gift. It's not about getting a guaranteed return or getting a return that hits it out of the park.
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Re: Investing gift from grandma

Post by cheese_breath » Sun Apr 14, 2019 10:40 am

Grt2bOutdoors wrote:
Sat Apr 13, 2019 10:11 pm
to give is to sacrifice, that is the true gift. It's not about getting a guaranteed return or getting a return that hits it out of the park.
But if a $1,000 gift becomes worthless it hurts both the giver and the receiver.
The surest way to know the future is when it becomes the past.

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Re: Investing gift from grandma

Post by NotWhoYouThink » Sun Apr 14, 2019 11:17 am

If it's really a gift, then grandma has no say in how it is invested. We are finding out this is more of a contract. You can hold it, but I expect input on how it is used. Sometimes these contracts bind families together, sometimes they create (or aggravate) stress. Maybe this is a test, and if you pass you get more money later.

Personally, the whole Disney universe makes my skin crawl, the princesses and the merchandising and the huge generically-fun cruise ships. I hope my hypothetical future grandkids don't drink that particular Kool Aid.

It's not enough money to make a big difference now, so whatever keeps family peace is fine.

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Re: Investing gift from grandma

Post by whodidntante » Sun Apr 14, 2019 11:30 am

Apparently I would buy disney and short netflix based on the positions I took in this year's hedge fund contest. I explained why in my letter to suckers shareholders. But I don't trade single stocks with real money.

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Re: Investing gift from grandma

Post by Wiggums » Sun Apr 14, 2019 11:43 am

NotWhoYouThink wrote:
Sun Apr 14, 2019 11:17 am
If it's really a gift, then grandma has no say in how it is invested.
I have seen people put all sorts of conditions on gifts. My wife’s family does this. Interestingly, my wife and I were never told what to do with the money, but her siblings all get conditions. I make sure that I always thank them in person and I recognize their generosity - no make what size the gift.

I’m sure that Grandparents have good intentions. You need to decide what works in your family. I educate my sons about saving their money and what things cost. They totally get the saving part, but not the what things cost yet.

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arcticpineapplecorp.
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Re: Investing gift from grandma

Post by arcticpineapplecorp. » Sun Apr 14, 2019 5:27 pm

Grt2bOutdoors wrote:
Sat Apr 13, 2019 10:11 pm
arcticpineapplecorp. wrote:
Sat Apr 13, 2019 2:46 pm

Why buy a lottery ticket when you can get the return of the market guaranteed?
There's a saying "don't look a gift horse in the mouth". Would you rather get the gift, even if it were in the form of a lottery ticket or no gift at all?
IMO, the OP should follow the wishes of grandma. At the very least, one should understand the value of the gift is beyond the monetary symbolism, to give is to sacrifice, that is the true gift. It's not about getting a guaranteed return or getting a return that hits it out of the park.
actually, I used to get a group of lottery tickets from a coworker for Christmas for a few years until he retired. He got me one of each: $2, $3, $5, $10 tickets. So I knew exactly how much he spent on me...$20. I never once one anywhere near the equivalent of the gift paid for (that's the point for the State obviously). The most I ever got was $10 (again, you lose about half your money when you play the lottery). Anyway, I always thought it would be better if he just gave me $20. He would have given the same amount, but I would have gained more value. Win/win. People don't think that way though.

In regards to looking a gift horse in the mouth, I'm not sure I see where the grandma is explicitly against the OP investing in a mutual fund. She has a preference in him/her investing in a single stock because that's how she invests (in dividend aristocrats) and she wants to imagine a warm feeling when the stock pops and grandchild thinks fondly of her.

It may be harder to imagine this with 8000 companies than 1 but let's be honest about it. The grandma is trying to teach something about the ownership of companies (American ones at that) and understanding how the grandchild can own a piece of the action of the products she already consumes. What better way is there to do this than to teach her how investing really works, not speculating/gambling on individual stocks.

Is the choice really, "Look kid, either buy my grandkid a stock, or you'll get nothing"??? That seems kinda cruel, personally. If the parent is actually trying to establish good habits of investing for the child, teaching how investing rather than gambling works (like grandma does) it's really a shame if grandma wants to say, "My way or the highway". But families are weird like that.
"May you live as long as you want and never want as long as you live" -- Irish Blessing | "Invest we must" -- Jack Bogle

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arcticpineapplecorp.
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Re: Investing gift from grandma

Post by arcticpineapplecorp. » Sun Apr 14, 2019 5:30 pm

Wiggums wrote:
Sun Apr 14, 2019 11:43 am
NotWhoYouThink wrote:
Sun Apr 14, 2019 11:17 am
If it's really a gift, then grandma has no say in how it is invested.
I have seen people put all sorts of conditions on gifts. My wife’s family does this. Interestingly, my wife and I were never told what to do with the money, but her siblings all get conditions. I make sure that I always thank them in person and I recognize their generosity - no make what size the gift.

I’m sure that Grandparents have good intentions. You need to decide what works in your family. I educate my sons about saving their money and what things cost. They totally get the saving part, but not the what things cost yet.
I find this interesting and sort of a continuation of Grt2bOutdoors' post. How can a gift giver put conditions on how something is used once the gift is given to the recipient? If they pay with their own money (like grandma buys the stock herself) then the parent has no choice to make (but maybe gives input as to what stock should be purchased). But if the money is given by grandma to her kid...it's up to the kid to do with it what s/he wants. S/he could blow it on booze, lottery tickets, or flushed down the toilet if desired. It's out of the gift giver's hands. I may want someone to be smart with money I give them, but I have no right to demand what they do with it after it's left my hands.
"May you live as long as you want and never want as long as you live" -- Irish Blessing | "Invest we must" -- Jack Bogle

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Re: Investing gift from grandma

Post by mortfree » Sun Apr 14, 2019 6:05 pm

arcticpineapplecorp. wrote:
Sun Apr 14, 2019 5:30 pm
Wiggums wrote:
Sun Apr 14, 2019 11:43 am
NotWhoYouThink wrote:
Sun Apr 14, 2019 11:17 am
If it's really a gift, then grandma has no say in how it is invested.
I have seen people put all sorts of conditions on gifts. My wife’s family does this. Interestingly, my wife and I were never told what to do with the money, but her siblings all get conditions. I make sure that I always thank them in person and I recognize their generosity - no make what size the gift.

I’m sure that Grandparents have good intentions. You need to decide what works in your family. I educate my sons about saving their money and what things cost. They totally get the saving part, but not the what things cost yet.
I find this interesting and sort of a continuation of Grt2bOutdoors' post. How can a gift giver put conditions on how something is used once the gift is given to the recipient? If they pay with their own money (like grandma buys the stock herself) then the parent has no choice to make (but maybe gives input as to what stock should be purchased). But if the money is given by grandma to her kid...it's up to the kid to do with it what s/he wants. S/he could blow it on booze, lottery tickets, or flushed down the toilet if desired. It's out of the gift giver's hands. I may want someone to be smart with money I give them, but I have no right to demand what they do with it after it's left my hands.
Maybe grandma is making it easier for everyone by not opening a UTMA for the child tied to her name.

She is keeping it simple by letting the parents do it?

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Re: Investing gift from grandma

Post by Trader Joe » Sun Apr 14, 2019 6:19 pm

Darth Xanadu wrote:
Fri Apr 12, 2019 11:21 am
My stepmother has generously offered to gift $1,000 to my daughter when she is born next month, for purposes of funding a UTMA account and purchasing stock in her name. She has asked me to start thinking about what to buy.

She has always been a dividend investor, which is what her father taught her. Her expectation is that I purchase a company that my daughter can be excited about in the future, that they can "connect" over down the road, etc. She made the same offer for my 1-year old son, and I bought 10 shares of Disney (DIS) with her gift.

I'm curious what suggestions others have. Here's my current thinking:

Option A: Buy 10 shares of Disney, same as my son
Option B: Buy 1 share of Amazon
Option C: Buy 1 share of Google
Option D: Other??

In all cases, I'd fund the difference, although since I don't have much extra cash laying around Option D would be cheapest for me.
I would invest this money in Vanguard S&P 500 ETF (VOO)

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arcticpineapplecorp.
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Re: Investing gift from grandma

Post by arcticpineapplecorp. » Sun Apr 14, 2019 7:39 pm

mortfree wrote:
Sun Apr 14, 2019 6:05 pm
arcticpineapplecorp. wrote:
Sun Apr 14, 2019 5:30 pm
Wiggums wrote:
Sun Apr 14, 2019 11:43 am
NotWhoYouThink wrote:
Sun Apr 14, 2019 11:17 am
If it's really a gift, then grandma has no say in how it is invested.
I have seen people put all sorts of conditions on gifts. My wife’s family does this. Interestingly, my wife and I were never told what to do with the money, but her siblings all get conditions. I make sure that I always thank them in person and I recognize their generosity - no make what size the gift.

I’m sure that Grandparents have good intentions. You need to decide what works in your family. I educate my sons about saving their money and what things cost. They totally get the saving part, but not the what things cost yet.
I find this interesting and sort of a continuation of Grt2bOutdoors' post. How can a gift giver put conditions on how something is used once the gift is given to the recipient? If they pay with their own money (like grandma buys the stock herself) then the parent has no choice to make (but maybe gives input as to what stock should be purchased). But if the money is given by grandma to her kid...it's up to the kid to do with it what s/he wants. S/he could blow it on booze, lottery tickets, or flushed down the toilet if desired. It's out of the gift giver's hands. I may want someone to be smart with money I give them, but I have no right to demand what they do with it after it's left my hands.
Maybe grandma is making it easier for everyone by not opening a UTMA for the child tied to her name.

She is keeping it simple by letting the parents do it?
Sure, but that has nothing to do with controlling what the money is invested in after the fact. Once the parents have the money, they are free to invest it as they see fit. If they think (rightly so) that a total stock market investment is better from a risk perspective than investing in one company (even Disney) then they should have the right to make that choice. Some of this post is about whether the parents have any say in the matter.
"May you live as long as you want and never want as long as you live" -- Irish Blessing | "Invest we must" -- Jack Bogle

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