Best way to buy individual stocks?

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minneapples
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Best way to buy individual stocks?

Post by minneapples » Fri Jan 15, 2016 6:09 pm

I know, I know. We don't do that here. But I want to buy an individual stock -- a single share -- for my son in a company he has attachment to (probably Ferrari) so he can watch it over time and learn about the stock market in an easy to understand way that also feels a little personal. I don't expect to make money, and in fact I expect to lose money, but he's got to understand what a stock is before he can understand what a mutual fund is, and this seems like an engaging way to learn about stocks. If it seems effective I'd do the same for my other son when he's a little older.

What do you suggest for doing this? Among the low cost companies like Scottrade and ETrade, do you have a preference in terms of cost and ease of use? I'm assuming I'd set the account up in my name and then just make my son a beneficiary? I don't want to make anything complicated tax wise, but I am just guessing on whether that might be an issue.

Edited: I just realized this was in personal finance, please move to investing if that's more appropriate (though that doesn't seem exactly right since as I said, I don't expect to break even here.)

qui
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Re: Best way to buy individual stocks?

Post by qui » Fri Jan 15, 2016 6:14 pm

Do you want to give him the actual certificate? I know a lot of companies like TD Ameritrade will give you the actual certificate for a single share, but there's a fee associated (~$40 IIRC)

I actually looked into this once before. If you don't want to give him a certificate, it should be a simple process. Just set up the account, make the purchase, and then you can transfer the share to him.

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saltycaper
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Re: Best way to buy individual stocks?

Post by saltycaper » Fri Jan 15, 2016 6:15 pm

I wouldn't worry too much about trading costs since this is not going to be an ongoing thing. I'd pick a place where the types of products offered commission-free are the sort you would want your son to learn about down the road. For me, that would be Vanguard, with Fidelity in 2nd place.
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nisiprius
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Re: Best way to buy individual stocks?

Post by nisiprius » Fri Jan 15, 2016 6:15 pm

I'm just saying. There's a company called, what is it, oneshare.com? Hmmm... either their site is down or there's some other glitch...

Image

Never mind.

Well, I bought my granddaughter one share of Target stock some years ago through this company... if it still exists. In a sense it's a total ripoff, because they send the actual stock certificate and they charge an arm and a leg above the cost of the stock, and there's a ton of upsell... I think it cost me $80 or $90 to give a $45 share of stock. On the other hand they are basically set up for people who... well... want to give their granddaughters one share of stock.

By the way, it didn't work. She didn't know what the heck it was and never paid any attention to it, and her mom had to deal with minuscule checks for tiny dividend payments.
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dubsem
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Re: Best way to buy individual stocks?

Post by dubsem » Fri Jan 15, 2016 6:24 pm

For US domestic stocks, Robin Hood, the app.
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bondsr4me
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Re: Best way to buy individual stocks?

Post by bondsr4me » Fri Jan 15, 2016 6:30 pm

I would recommend buying Berksire Hathaway B share.
The best management IMO.
Start a Vanguard or Fidelity account for him.

Don

gwrvmd
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Re: Best way to buy individual stocks?

Post by gwrvmd » Fri Jan 15, 2016 6:53 pm

Ahhhh....Reminds me of those glorious days of yesteryear when Playboy went public
As you can probably imagine, beautiful certificate and thousands of people bought one share
If you were a business major, no male dorm room was complete w/o a framed share of Playboy on the wall
I bought 50 shares.....beautiful certificate, terrible investment.
Only 10% of shares went public, Hugh Hefner didn't pay any attention to them. Lesson learned
Incidentally, back in the day you got share certificates when you bought mutual funds, I have had certificates from 3 different funds. Most people have never seen a mutual fund share certificate....Gordon
Last edited by gwrvmd on Fri Jan 15, 2016 7:31 pm, edited 1 time in total.
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Raymond
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Re: Best way to buy individual stocks?

Post by Raymond » Fri Jan 15, 2016 7:13 pm

bondsr4me wrote:I would recommend buying Berksire Hathaway B share.
The best management IMO.
Start a Vanguard or Fidelity account for him.

Don
For a moment, I read "Berkshire Hathaway A share" :shock:

Agree on Vanguard or Fidelity :happy
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sport
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Re: Best way to buy individual stocks?

Post by sport » Fri Jan 15, 2016 10:21 pm

When my children were young, I opened a Vanguard mutual fund account for each of them. While I kept all the records, I gave them the printed semi-annual reports. I was able to show them the list of companies they "owned". As they grew older, they understood what a mutual fund was all about.

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arcticpineapplecorp.
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Re: Best way to buy individual stocks?

Post by arcticpineapplecorp. » Fri Jan 15, 2016 10:47 pm

minneapples wrote:I know, I know. We don't do that here. But I want to buy an individual stock -- a single share -- for my son in a company he has attachment to (probably Ferrari) so he can watch it over time and learn about the stock market in an easy to understand way that also feels a little personal. I don't expect to make money, and in fact I expect to lose money, but he's got to understand what a stock is before he can understand what a mutual fund is, and this seems like an engaging way to learn about stocks. If it seems effective I'd do the same for my other son when he's a little older.
I think I know what you're trying to say about "feel[ing] a little personal"--that it's more impersonal to own 9000 or so stocks rather than one. How much can you really get to know 9000 stocks, right? But most experts say don't get attached to any stock you pick. When it really comes down to it, it's about the money, right? So whether you make (or lose) money with one stock or 9000 stocks, what's the difference?

I wouldn't invest with an expectation of losing money. Otherwise, why would you invest? The only reason to invest is with the expectation of making money. It would be better to donate money (or spend it) than to invest to lose money. If you invest in Ferrari and it loses money, your son might just learn investing is risky and avoid it altogether. I don't think that's what you want. Owning the economy of the planet is a better way to make money over time, and also explain risk of loss along the way. If you buy a stock and it goes belly up, you only get to teach him half of the lesson.

Now you say he needs to "learn about the stock market". This is the second post I've seen about buying individual stocks INSTEAD of the market, and yet both times the OP talks about the MARKET. So my response is the same (for a second time)--If you want him to learn about THE MARKET, then why not have him invest in the TOTAL MARKET. Otherwise, he's not learning about THE MARKET. He's learning about A STOCK, which is definitely NOT "The MARKET". He will have learned about stock risk, sector risk, etc., but not about Market Risk...because his stock could perform very differently than THE MARKET.

Finally, the older I get the more I fail to see things as mutually exclusive despite how they are presented by others. In other words, why exactly does he need "to understand what a stock is before he can understand what a mutual fund is"??? Because a mutual fund contains lots of stocks and he needs to understand what a single stock is first? Why first?

I think you can ask him if he likes his Nike (or Reebok or whatever) sneakers, McDonald's food, starbucks latte, family car (insert company name), etc. Then simply explain that these companies make money by selling those items, provided they bring in more money than they spend. The difference is called profit and the owners of a company share in those profits. Investing in companies allows him to be an owner in those companies and share in those profits.

Then ask him if he'd like to just own one stock like Ferrari or 9789 stocks? Hopefully he'd rather own more companies than less. I'd be surprised if he didn't. Aren't most of us taught the more the merrier? Then explain how he can own those 9789 stocks by owning a target date retirement fund or similar diversified low cost fund through Vanguard.

Total U.S. Stock Market Index Fund -- 3791 stocks
Total International Stock Market Index Fund -- 5998 stocks

Good luck.
"Invest we must." -- Jack Bogle | “The purpose of investing is not to simply optimise returns and make yourself rich. The purpose is not to die poor.” -- William Bernstein

bene1
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Re: Best way to buy individual stocks?

Post by bene1 » Sat Jan 16, 2016 11:09 am

OP,

I'm on board with your reasoning for wanting to buy a single share. My wife is a Disney fan and purchasing a couple shares made investing "real" to her. It's an illustrative exercise rather than serious savings. After watching the gyrations for a while, index funds started to make more sense.

I don't have the best answer to your question though. I used TradeKing.com. After a year with no other trades, they hit me with a No Activity Fee, something like $25, so be sure to look out for that.
Last edited by bene1 on Sat Jan 16, 2016 1:39 pm, edited 1 time in total.

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Christine_NM
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Re: Best way to buy individual stocks?

Post by Christine_NM » Sat Jan 16, 2016 11:40 am

Try this http://www.giveashare.com/

It seems to register ownership electronically and send a framed certificate. Never used it myself. Put first things first: does the child have a savings account?
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marino138
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Re: Best way to buy individual stocks?

Post by marino138 » Sat Aug 25, 2018 5:02 pm

best way to buy single stocks is through a self directed roth ira through m1 finance, better platform than robinhood and its free of charge + its all tax sheltered through the roth!

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AAA
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Re: Best way to buy individual stocks?

Post by AAA » Sat Aug 25, 2018 6:26 pm

You're asking about how to buy the one share of stock. Another question would be how to sell it if/when the time comes in the future. Years ago my son was given the gift of one share of a company, with the certificate, and it was a bit of a pain when the time came to sell it (I forget what we did). But as this is mainly for educational purposes, you might not be concerned about that.

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gasdoc
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Re: Best way to buy individual stocks?

Post by gasdoc » Sat Aug 25, 2018 8:26 pm

We bought our daughter one share of Disney for her 10th birthday. She absolutely loved it and and the certificate was beautiful. We framed it and hung it next to her photos from a Disney cruise we did when she was younger. It was a display she treasured well into her teens. I believe we used “oneshare.com.” We gave her the dividend check every year, and she enjoyed getting the funds when we finally sold the share. We told them we lost the certificate so that we wouldn’t have to return it (securities fraud?).

Gasdoc

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arcticpineapplecorp.
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Re: Best way to buy individual stocks?

Post by arcticpineapplecorp. » Sat Aug 25, 2018 8:58 pm

didn't realize I had posted on this one already, but here's another thought:

show him the three month return for Ferrari from when it became public (10/23/15) through 2/2/16 (yes, cherry picking to make a point). I know it's only a few months and investing is supposed to be long term but get him to think about and feel what he'd feel if his investment lost 38.37% in just three months. The chart below shows the what an investment of $10,000 on 10/23/15 would have been worth by 2/2/16 in:

the Vanguard total Stock market index fund: $9222.33
Ferrari: $6163.88
The Vanguard total international stock market index fund (because Ferrari clearly isn't a U.S. company) : $8828.54

This is not to show the U.S. is better than international stocks. It's to show how risky ONE stock can be compared to an entire market. Yes, both indexes lost value, but far less than an indivdual stock.

Image

source:
https://quotes.morningstar.com/chart/fu ... A%5B%5D%7D

Sure you can show him year to date in which case Ferrari has done much better than both other index funds, but that's not the point. There's tracking error that may be significant.
"Invest we must." -- Jack Bogle | “The purpose of investing is not to simply optimise returns and make yourself rich. The purpose is not to die poor.” -- William Bernstein

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