Why I Give Stocks as Gifts
When the word gift is mentioned, most people don’t think of stock. A stock is a partial ownership of a company, also known as equity. When you gift stock, you are giving the gift of company ownership through stocks.
You may think, why not give cash or a store gift card as a gift. Well, they provide little to no benefits when compared to stocks. Gifting stocks provides benefits to the giver and recipient.
Gifting stock provides the giver benefits with taxes and creating a positive impact. The benefits of gifting stocks are:
- Tax Efficiency: Transfer wealth without having to convert stocks to cash.
- Tax Deduction: Donating stock to charity could qualify for tax deductions
- Positive Impact: Helping start or add to someone’s investing journey.
Gifting stock grants the recipient access to the benefits of stock investing. The benefits of stock investing are:
- Compound Interest: Earnings are reinvested to generate more earnings.
- Capital Gains: The profit when stock is sold at a price higher than the purchased/received price.
- Dividends: A share of a company’s earnings paid as income to shareholders as more stock or cash. Not all stocks offer dividends.
- Tax Advantages: Capital gains and dividends are taxed at the capital gains rates, which are lower than the ordinary income rates.
- Voting Privileges: The ability to vote on company decisions.
- Outpace Inflation: A higher rate of return to beat the rate of inflation.
- Wealth Building: The ability to generate long-term income and asset accumulation.
- Ownership: The ability to be part owner of a company and go from consumer to owner.
Invest in People
I started investing when I was in college. Knowing the benefits of investing, I wish I started investing earlier. I can’t go back in time and start investing earlier. But, I can help others to invest now rather than later. Time matters with investing, because of the power of compounding. The earlier someone can start investing, the better.
As a kid, I would always get toys and cash as gifts. Neither lasted. Toys would break or lose their appeal and I would spend the cash. I enjoyed getting them and I believe kids should get toys. However, that is not all they should get. Stocks should also be gifted to kids to invest in their future.
I’m a giver. I love to give gifts and see the enjoyment they can bring to someone’s life. Giving stocks as a gift is one way I can invest in people. By giving stocks as a gift, I spark an interest in finance and teach how to invest. This year I started giving stock as a gift and it has become a new gift giving tradition for me.
Gifting Stocks are the gift that keeps on giving. It provides benefits to the giver and recipient. When you gift stock, you are giving the gift of company ownership through stocks. I gift stock to invest in people and help them start and continue investing. Next time the word gift is mentioned, think of stocks.