Your Kid, The Shareholder

My grandfather tried to teach us the importance of saving money by giving us "Dime Kitties". Those of you unfamiliar with this feline-inspired investment vehicle will be amazed at its simplicity. The cat shaped cardboard folder has empty slots inside if it. Each slot is conveniently sized to hold a dime.

In theory a child saves coins by filling the slots. Once the folder is full, you take the Kitty to the bank and deposit the coins into a savings account. On birthdays Grandpa sent full Dime Kittys. Upon receipt, I promptly unloaded the coins and bought three dollars worth of candy at the nearby Stop-N-Go.  

In these modern days you can take a more sophisticated approach to teach your kids how to save and invest for the future. Instead of pumping a few coins into a savings account at your local bank you can actually buy your kid stock in that bank. In the future Timmy can have more than a jar full of old coins. He can be a shareholder. 

If you have a newborn you may not be too worried about you child's ability to digest complex financial options and investment strategies. Fair enough. At some point down the road, however, they need to understand money. Further down that road they need to know about savings and investments. Many people are cautious when it comes to starting an investment plan for their kids. Some want the first step to be symbolic.

{mosnooad}Companies like Oneshare.com encourage this transaction by offering the sale of a single share of stock. The stock certificate you select can be mounted, framed, and transferred to your name. On a stock like Disney the stock ($32), frame ($42) a transfer fee ($39) will run you about $115.00. Follow this route and your kids will have a very nice piece of art that may or may not inspire them to invest.

Here's a better idea. For $35 you can purchase the Sharebuilder Young Investment Kit.  Sharebuilder is an online broker catering to small investors. Setting up a custodial account on Sharebuilder is easy. Enroll in the cheapest option and there is only a fee when you buy additional stock for your kid. Other options allow regular investments at low rates. The $35 you'll pay for the kit will get you $125 worth of swag, including $25 in the stock account, a $10 iTunes gift certificate, and lots of material to educate young investors.  

There are many different approaches to saving and investing. I certainly don't advise this to be your only approach. Determine your personal goals. If you want something safe, set up an IRA or a trust. However, if you want to let you kids dip their toes into something bigger, Sharebuilder is a safe way to do it. Be warned. Before you sign up you should read up on custodial accounts.  The stocks belong to the kid, can't be transferred, and you must manage the account until your kid reaches the distribution age. Some earnings can be taxed. If you put the money in the account don't plan on pulling it out anytime soon. If you need liquid investments that be converted to a Snickers bar with ease, you may want to consider the Dime Kitty.