Would you let your kid buy stock in Disney?

By Aaron Crowe

Would you let your kid buy stock in Disney?






Buying stock directly from the company, whether Disney or another company you like, can be a bargain because you don't need a discount broker or online brokerage service or their accompanying fees. If you want to teach your kids how to invest, this is an easy way to do it.

Start by researching companies your kid has an interest in, such as companies that sell toys, food, clothes or services they use. Either go to the company's website and see if it has a direct purchase plan or a dividend reinvestment plan. Or find an online list of companies that offer such plans. Whichever way you buy shares, use the method that has the lowest fees. Many companies won't charge fees to buy stock directly through them, but will charge an administrative fee to sell shares.

Even if you're already a stockholder in the company, you can still buy directly through them without paying the fees you'd normally pay an investment broker. Disney, for example, allows owners of at least five shares of its common stock to use its direct stock purchase plan.

Investors can make a one-time purchase or make monthly investments, which would help explain to a kid how dollar cost averaging works over a year. Because shares may not be bought until weeks after you send in your money, you won't know the price of the shares until after the company bought them for you.

If your child really gets interested in the company and its stock, you might want to take them to the annual shareholders' meeting. Disney's shareholder meeting is in Missouri this year, which is too big a trip for us, but I hope to make it to a meeting someday. Unless your kid is really into this stuff, the annual meeting might be just one big, boring presentation, but it's another way to show your children how their money is working for them.


Disclaimer: Discover is a paid advertiser of this site.

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