Around the holidays, kids clamor for all kinds of things—from board games and talking Barbie dolls to iPads and video games. But this year, they may have something more unusual on their holiday list: shares of stock.

The reason? You can now give a gift card loaded with money for the purpose of buying shares of stock. You can buy the stock gift cards at drug stores, grocery stores and at retail outlets like K-Mart. (Electronic gift cards are also available). What could be cooler for a money-minded kid than getting a gift card emblazoned with the logo of a hot company such as Apple, Tesla, or Facebook? 


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While it may make for an unusual stocking stuffer, there’s no guarantee that stock gift cards will be big sellers this year. While gift cards are big business—some $130 billion will be loaded onto them this year, according to CEB, a management consulting firm—kids aren’t exactly pining for stocks. In years past, well-meaning adults would introduce kids to investing by bequeathing shares (or often, a share) of stock in the form of stock certificates. Those certificates would, inevitably, be stashed away in the back of a closet or in a filing cabinet until the day came when, years later, the kids would cash them in.

But if the marriage of gift cards and stocks catches on, this could be a novel way for kids to start investing. It wouldn’t be bad for the online brokerage firm, Stockpile, either, which is behind the stock gift cards. The company could end up with some new, long-term customers.

Stocks on a Card

Here’s how it works. If you want to buy a gift card it’ll cost you the face value of the amount you want to give ($1 to $1,000) plus $1.99 (though the price could change in January) for amounts of $100 or less. For anything more than $100 there’s also a 3% gifting fee, which covers the credit/debit card fee and trading commission, so the recipient won’t have to pay anything to get the stock. There's no sales tax.

The gift card comes emblazoned with a company name and its ticker, but recipients can choose to purchase shares (or fractional shares) of any company or exchange-traded fund they want. The shares would be maintained in a Stockpile brokerage account.

There are some hurdles to opening the Stockpile account, however. The target market for these gift cards is kids and teenagers but since they are minors they'll need an adult to open a custodial account. The minor owns the stock, while the adult has legal responsibility over the account until the child turns 18.

The minor can receive her own log-in credentials to see how her stocks are performing anytime. She can also trade shares as long as the adult agrees. When the child sets up the order to buy shares online, for example, an email is automatically sent to mom or dad for approval. Once approved, the order would be executed.  

What happens if the kid you have in mind has no interest in stocks? The recipient can exchange the stock gift card for a more typical store gift card, perhaps one from Amazon.com. But it can’t be redeemed for cash.

There are other stock-giving alternatives as well. For example, Charles Schwab offers custodial accounts to clients who want to open an account for their children or grandchildren, through its service, Schwab Intelligent Portfolios

As for the old-fashioned paper stock certificate gifts, we suggest skipping them. Eventually you'll need a broker to sell the shares, and converting the shares from the shareholder's name to street name may result in additional fees. We'll make an exception for Berkshire Hathaway stock, whose A shares are currently trading at about $200,000 each.