Gift Cards for Investing
Teaching the Art of Saving
A new use for gift cards has been launched. Giving shares of a stock to a child is not a new idea, but it’s been tricky to execute and administer. Now there is a way to skip paperwork and give the gift of investment by means of a gift card, a favorite prepaid product.
Blackhawk Network, a prepaid and payments network, teamed up with Stockpile, a registered broker-dealer and member of FINRA and SIPC, to introduce “Gift Cards for Stock” so that shares of Disney, Apple, Starbucks, or other company stock can be given to family and friends with the least possible administrative and compliance hurdles. Stockpile pioneered eGift Cards for stock, which will be made available at selected US retailers. The gift card can be redeemed online to open and fund an account to hold stocks. Consumers may buy the prepaid card for themselves or as a gift to a child, grandchild, or anyone they want to gift.
A poll by Blackhawk found that 73 percent of millennials between 18 and 34 do not own stock. Now seemed like a good time to launch the “Gift Cards for Stock” product.
“At Blackhawk, we are constantly innovating and looking for new opportunities that give value to consumers, so we research different segments and products. That card that ultimately can be redeemed online for stock chosen by a consumer fills a real need today. Millennials are looking for a new way to invest and parents want entry to the stock market. The introduction of Gift Cards for Stock was a combination of the right product at the right time and Blackhawk has the network to get this into the hands of the consumer,” said Teri Llach, chief marketing officer, Blackhawk Network.
Blackhawk attributes the barriers to participation in the stock market primarily to lack of knowledge about buying stock, and also limited budget to put away money for investments. Blackhawk’s poll found that 54 percent of millennials would be interested in purchasing stock if it were as easy as buying a gift card at the grocery store or other retailer.
Stockpile’s gift card comes in denominations of $25, $50 and $100 and may be redeemed for a variety of well-known stocks or exchange traded funds (ETFs), such as the NASDAQ or S&P 500. When you redeem a Stockpile gift card and open a brokerage account, you get fractional shares of real stock that you select. You can keep adding on to build up your investments over time, the same as you would do in any brokerage account where your investments are being held.
Gifts to the Young
Children and teens can own stock by having an adult on the account with them; it’s called a custodial account, according to Dan Schatt, chief commercial officer at Stockpile. “The minor owns the stock, while the adult has legal responsibility over the account until the minor is 18 years old. The minor can receive his own login credentials so he can see how the stocks are doing any time. In addition, young people can place stock trades with an adult’s consent (they are notified via email).”
As with any trade there is a commission on the buy of the shares. Schatt said the commission is built into the price of the gift card. The recipient of the gift card never pays a fee and can even switch stocks for free. To follow the portfolio of investments and/or trade stocks, you go to Stockpile.com. Each stock in the portfolio is displayed along with the company logo. For example, if you owned shares of Disney, you can view the Disney logo, number of shares you own, and the current value.
“We also display the dividends that you have received,” Schatt added. He explained about the development of the technology platform, saying that the most difficult obstacle was living up to Stockpile’s vision: making investing more accessible through a simple and easy way.
“We have worked with phenomenal developers to build a product that is convenient, but also provides the necessary resources for each user to be a successful investor,” Schatt said.
Gift Certificates Spark Investing
A website called Sparkgift.com also makes it possible to give the gift of investments through a gift certificate. You choose from thousands of stocks and index funds, enter the name of the recipient with their contact information, write a personal note, and pay for it with a credit card. SparkGift does the rest. Gifts can range from $20 up to $2000. The average gift size is $75 to $100, according to the company.
When you give a gift on SparkGift, you provide the name and email of the recipient, and the parent name and email if the recipient is under 18. You choose a stock or fund that you would like to give and pay. Using fractional shares technology, SparkGift enables you to get a fraction of a share; if you buy $20 of a stock that is trading at $100, you’re getting 0.2 of a share.
SparkGift creates a gift certificate and notifies the recipient that they have received this gift. The recipient then uses the SparkGift website to create an investment advisory relationship with Spark Advisors, and completes the steps to open a brokerage account with our brokerage partner Folio Institutional. Folio Institutional provides the brokerage engine that powers numerous financial investment advisors, including Spark Advisors. Once the brokerage account has been opened and the gift accepted, Spark Advisors will place a trade in the gift recipient's brokerage account. The gift recipient logs into SparkGift to see their investment portfolio.
The registration of the account is all handled online without leaving the SparkGift site and can also be done on a smartphone or tablet.
An added feature is the Gift Registry, where you can list the stocks that interest you, so gift-givers can select those stocks for you. As the giver, you can arrange multiple gifts for different family members or friends and schedule those gifts to be delivered on specific dates. To date, half of all gifts on SparkGift have been to minors and 30 percent are repeat customers, the company reported.
By giving the gift of stock to children and teens, they learn how to save, an important financial concept that can make a difference in their future. Money management technologies like this give young people the tools they need to save for their own financial security, something they do not often learn in school.
Financial experts suggest that this generation of young people may not have the safety net that many boomers have, indicating that they should learn to start saving early. SparkGift notes that a $50 gift of Apple stock in 2005 turned into $2,062 by 2015, while an ordinary $50 gift card probably turned into something now clogging a landfill. Investments that grow over time are a clear example of how to build wealth, or at the very least, a modicum of financial security. And gift cards and certificates for stock are ways way to make this happen.