SparkGift, fractional share investing-great for kids, really

We were compensated for this post. All thoughts are our own. If you’ve ever attended one of our child’s birthday parties thank you. Thank you for your generosity, for the remote control toy that broke the next day, the Sesame Street toy that was just a bit too young and that thing that they said they’d play with, but never saw the light of day again. SparkGift is the gift that long-term planning parents need to get on board with for many reasons. Call it a legacy, retirement, lesson in investing or whatever you’d like, but SparkGift is a way to give what people what they need-and will one day, want-and need.

I never really learned about investing until I was in my mid 20’s. While I’m glad that I learned those lessons I missed out on 25+ years of massive compounded interest that would have multiplied like bunnies by the time I’m ready to retire.

SparkGift is a way for people to give stocks and index funds as gifts. Between those options you’ve got more than 6,000 choices to invest in the commonly mentioned stocks like Apple, Netflix or the index funds that group together areas of interest or size.

The ease of SparkGift-and why it’s so perfectly suited for children is because it allows people to fractionally gift stock or index funds. For example, a stock you believe in costs $60 a share, but you don’t want to spend $60 on a gift for a 3 year old? Oh, I get that, our maximum birthday gift is $15. The value of our gifts might be larger, but we’ll only spend $15.

If you’re like us and cap your gifts at a certain level SparkGift is awesome. That toy (that will break or age out of)gift card with money or iTunes card is fun in the moment. Soon after the party you’re either looking for the gift card, have music buying regret for getting that boy band music instead of a classic like Pink Floyd or have broken that toy.  One of the three situations is true and you know it.

You can buy a fraction of an investment, at least $20 and the only fee for the purchaser is $2.95 on all gifts up to $100 through December 31, 2015. After that the fee is $2.95 plus 3%, all of which are paid by the gift giver. The recipient of the gift pays nothing and the process for both people is quite easy.

We purchased some Netflix, as well as some shares of a tech stock for a friend whose child’s Bar Mitzvah is coming up soon. As investment advisor we are not. We purchase what we know and personally research, but understand that it’s an investment and could go up or down.

For the gift giver it all starts with creating your account at SparkGift. Once that’s done, just decide how much you’d like to give and then type in the name of the fund or stock that you want to give. The next screen is where you include the recipient’s name, email, phone number, message to them that you write and when you’d like the gift sent.

During this stage you’re also reminded that this is an investment and that the money might go up or down. Take note of the box to check if your person is under 18.  After that you go to the payment screen and you’re done. Payment is accepted by credit cards. At the end of this the purchaser is sent an email describing what happens next.

The recipient will receive an email (or text) letting them know that they have been given shares of a stock or fund.  All they’ll need to do to claim the gift is set up an account with Folio. Folio is the SparkGift’s partner in this transaction that handles the buying and holding of the investments.

For the giver the process takes under 10 minutes from start to finish.  For the recipient it takes about 5 minutes to set up the Folio account. After that your recipient can watch their gift grow, enjoy compound interest, study up on the company/industry and more.

As a parent I love this concept because the numerous gift cards that we feel obliged to give tweens and teens bother me. I know they’ll spend it on coffee, music or something fun with their friends and I am all for fun. But I also want them to realize the massive amount of money they’ll waste on trivial crap. We parents can’t do this in a preachy way; but if we do it as a gift and let them follow along with the money’s journey then we’ve taught them how to fish.

Also, as a gift giver I’m much more apt to spend $20 on something that is an asset, than $15 on a thing whose future will be short.  You can create a Gifting Page for any occasion and then tweet, share on Facebook or email the link to anyone who might be coming to your event. Bonus: if they take you up on this offer they don’t have to leave their house and it’ll encourage conversations at home about saving money and investments.