So should you start gifting stock certificates to the children in your life? I polled the experts and they mostly say yes, though with some qualifications.
Financial planner Tom Corley points out that stocks are risky since they mean you "put all your eggs in one basket." Instead, he suggests that present-givers consider contributing to, or setting up, a child's 529 plan. Those education savings accounts "allow you to invest a small amount of money in hundreds of stocks in a tax-advantaged way (no tax on gains and dividends inside a 529 Plan)," he tells CNBC.
Prices are also higher than they were in the 1980s and '90s, so, Corley points out, "even $5,000 will only buy you so many stocks," any or all of which could, of course, under-perform. If you do want to invest yourself on behalf of a child, be sure to take precautions by diversifying.
Sophia Bera, founder of Gen Y Planning, concurs that a 529 plan is a smarter bet these days, since it is "more diversified and can be used for qualified education expenses and has favorable tax treatment."