Investing knowledge is perhaps one of the greatest gifts you can give your children; and one that will last a lifetime. However, there are myriad investing choices that can be overwhelming and sometimes intimidating. Choosing an investment like Disney stock will help you keep them interested in the learning process because they are now a part owner of Disney, and as Disney grows, their investment will grow also. The first step is to decide what type of account to open. Please keep in mind there are more account types and strategies than we can cover. So, conduct thorough research and we will highlight the most common account types you may use to purchase Disney stock for children.
You may choose to open an account under The Uniform Transfers to Minors Act, (UTMA). This act was designed to allow minor children to own securities, such as stocks like Disney, as well as other appreciating assets like real estate and art. UTMA provides an avenue for you to make irrevocable gifts to the account for the benefit of a minor yet maintain control over the management of those assets until the minor reaches a certain age, which is usually 21. UTMA accounts are most commonly offered by brokerage firms and banks.
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Individual Investment Accounts
You may also open an individual investment account, or brokerage account. This type of account is very common and easy to open and maintain. You may open a brokerage account through a brokerage firm or bank, and even open an account over the Internet directly with Disney. With this type of account you will have ownership and control over all account activities until such time as you see fit to gift or transfer the assets. With either of these accounts, you will need to be aware of prevailing gifting limitations.
After you have completed your research and have decided what type of account you will open, you will need to make some investment decisions. Either of these accounts will allow you to contribute funds in order to purchase an investment. If you have opened the account at a firm or bank, you need only make contact with the investment representative and request the purchase of your Disney stock. If you have made the decision to open the account via the Internet with Disney, you will have options available to make the purchases you desire. In addition, most online entities, including Disney, have representatives available to walk you through the investing process.
Significant differences in taxation, control, and allowable investments exist in each account type. For example, contributions made to an account opened directly with Disney are the property of the adult donor and are taxed as such. Additionally, this is an account that will restrict you to the purchase of Disney stock. On the other hand, funds contributed to an outside investment account will allow you a wider variety of investing options. You may wish to consider the advice of an accounting or financial professional prior to investing; these individuals will often provide an initial consultation at no cost.