Getting Started: How to Buy Stock as a Gift for Your Child

Giving your child a financial asset might sound unconventional, but it could be one of the most meaningful presents you ever offer. Buying stock as a gift for a child introduces them to wealth-building concepts early on, transforming a simple present into a long-term educational tool. Beyond the theoretical appeal, this type of gift provides real, tangible benefits that extend far beyond the holiday season.

Why Stock Gifts Make Sense for Kids

The case for giving stocks to young people has never been stronger. According to financial advisors, stock gifts serve multiple purposes simultaneously. “It’s a great way to teach about the concept of saving, stock ownership and discipline, even if it’s a small amount of money,” notes one financial advisor from a prominent advisory firm.

Consider the practical advantages: Market downturns create opportunities to purchase more shares at lower prices, meaning your gift goes further. More importantly, children today are more interested in investment-based presents than traditional gifts. In 2021, a significant portion of Americans expressed interest in receiving investments as holiday gifts rather than conventional items like gadgets, clothing, or gift cards.

Unlike a toy that loses appeal in weeks or clothes that wear out, stock holdings can appreciate over time. One gift could spark a lifelong interest in investing and potentially create a meaningful income stream decades down the road. Stock gifts also open doors to important family conversations about money, saving habits, and how wealth compounds over time.

Setting Up a Custodial Account: The Foundation

The primary challenge with gifting stocks to minors is straightforward: children cannot legally own financial assets independently in most states. This is where custodial accounts become essential.

A custodial account is specifically designed for this situation. You open the account on your child’s behalf, then purchase stocks or transfer existing shares into it. The mechanics are simple—you control the account until your child reaches the “age of maturity,” which is typically either 18 or 21 depending on your state’s regulations.

Once your child reaches that milestone age, the account ownership automatically transfers to their name. At that point, they gain complete control and can do whatever they wish with the assets—hold them, sell them, or manage them however they see fit.

If you want more control over how the assets are eventually used, you have another option: establishing a trust. While trusts involve more paperwork than custodial accounts, they provide significantly greater flexibility in determining how and when your child can access the funds.

Simple Methods to Purchase and Transfer Shares

You have several straightforward pathways to buy and transfer stock as a gift for a child:

Electronic Transfers Through Your Broker This is the most direct approach if you already have a brokerage account. Once you’ve gathered your child’s information and set up their custodial account, you can initiate an electronic transfer. You can either move shares you already own or purchase new shares and immediately transfer them. The process typically involves filling out forms through your broker’s platform—often completable in less time than a trip to the mall.

Mobile Apps with Built-In Features Some financial apps have simplified the process dramatically. Certain platforms allow you to send stocks directly to another person, even if you don’t currently own those assets yourself. Simply enter the amount, specify the recipient’s information, search for the desired stock, and complete the transaction.

Gift Cards Earmarked for Stocks If neither you nor your child currently has a brokerage account, this option works well. Gift cards designed specifically for stock purchases typically range from modest amounts to $200 or more. The recipient can use these cards to purchase shares of specific well-known companies—tech giants, entertainment companies, beverage manufacturers, or even sports franchises—or they might be given the freedom to choose their own investments.

Note on Specific Platforms Some popular investing apps don’t currently support direct stock gifting between users. However, you can still use these platforms by gifting cash to be used for stock purchases, or exploring their cryptocurrency gifting features if digital assets are of interest.

Making It Educational: Turning Gifts Into Lessons

The real magic of stock gifts lies in the conversations they spark. This present becomes a gateway to discussing fundamental investment principles with your child. Walk them through what they own—explain why you selected that particular company, discuss what the business does, and talk about why you believe it has growth potential.

Track the performance together. Check the price periodically and use those moments to discuss market movements, both positive and negative. This transforms abstract financial concepts into concrete, observable reality. Your child learns viscerally that investments can fluctuate, that patience matters, and that disciplined wealth-building happens over time.

Help them understand the relationship between company success and stock price movement. When a company they partly own launches a new product or announces earnings, these events become meaningful to them. You’re not just teaching abstract principles—you’re creating an investor’s mindset early.

Understanding Taxes and Legal Requirements

Taxes on stock gifts have important considerations, though the rules are simpler than many people assume.

For the Giver The person giving the stock only faces tax consequences if individual recipients receive gifts exceeding certain annual thresholds. As of 2026, these limits adjust annually for inflation. Generally, modest stock gifts remain well below these thresholds, meaning most family stock transfers don’t trigger gift taxes. Even if your total gifts to multiple people exceed the limit, you’d typically only file additional paperwork rather than pay taxes immediately.

For the Recipient When your child eventually sells the stock, they’ll need to report the transaction on their tax return. The capital gains tax they owe depends on how long they held it and their income level at the time of sale—factors that can be quite favorable for young people with minimal income.

Choosing the Right Stocks for Young Investors

The “best” stock to give depends on your child’s interests and your investment philosophy. Financial advisors generally recommend well-established companies with solid track records—businesses that have demonstrated resilience and growth over multiple decades.

One effective strategy is choosing companies your child already knows. If they use a particular tech service, enjoy a specific brand’s products, or follow a sports team, owning a share of that entity makes the investment personally meaningful. Disney stock remains the top-ranked gift stock according to platforms that specialize in stock gifting, likely because children connect with the brand emotionally.

Other frequently-gifted stocks include technology leaders, beverage companies, athletic brands, and various entertainment-related businesses. The common thread: these are recognizable names with long-term growth potential, making them ideal for the educational component of your gift.

Avoid chasing the latest hot stock or trendy company. Focus on businesses that have survived market cycles and demonstrated staying power. This approach teaches children the value of stability and long-term thinking—the actual lessons you want them to learn.

Taking the First Steps

Giving stock as a gift for a child represents a departure from typical presents, but the long-term value could far exceed any toy or gadget. Start by identifying a suitable custodial account platform or brokerage, then research which stock resonates with you and your child. Once you’ve completed the setup, you’ll have given a gift that keeps giving—and more importantly, you’ll have opened the door to a lifetime of financial knowledge and healthy money habits.

This approach transforms a simple present into an investment in your child’s financial future, starting them on a path toward wealth-building and economic literacy that will benefit them for decades to come.