Supply Chain Issues Getting You Down? Give Stocks for the Holidays Instead. Here's How

Hampered by supply chain issues? 

Global supply chain issues have started to recede, but executives in shipping, manufacturing and retail say that they don’t expect a normal return to operations until next year, according to the Wall Street Journal. COVID-19 outbreaks could also affect the supply chain further.

All of this means you may have to get more creative. Why not give your family members stocks instead? If you think it sounds kind of boring, rest assured that it's one of the best holiday gifts you could ever consider. We'll walk through the benefits and how-tos of giving stocks to loved ones in lieu of traditional gifts. Let's get started.

Reasons to Give Stocks for the Holidays

Thinking you want to give stocks instead of presents for the holidays? Congratulations on your out-of-the box-thinking. If you're not quite convinced (does it sound too cold and unfriendly to you?) take a look at these reasons. You might change your mind:

Reason 1: It's a fun way to get family members interested in investing.

If you want a way to get family members interested in the stock market, a specific industry or a particular company, buy them shares. It can be a great way to get teens and kids interested in money, stocks and investing. 

Reason 2: It's a gift they can keep forever.

Unlike a toy or other gift that gets tossed into a closet, a stock can last (and grow) forever. You might need to provide some education for younger family members, about the reasons to hold stocks over the long term. (Long-term investments almost always outperform the market as opposed to trying to time the market. You can also educate them that riding out temporary market downswings is almost always a better bet than shorting stocks.)

Reason 3: Recipients can benefit from future gains in the stock.

Nobody truly knows what will happen with a stock price because market forces exert their efforts on stock prices — they go up and down depending on supply and demand. 

Over the long term, the stock market has returned 10% per year on average for nearly the last century. The S&P 500 serves as the measure for annual stock market returns.

Reason 4: It's a thoughtful gift (really!).

There's no better gift than wanting a family member to experience financial security. Gifting stock may be one of the most thoughtful holiday gifts ever, particularly if you have a passion for investing. Share a book about investing along with a stock purchase and it could set your family member on a lifelong pursuit of financial freedom. What a great gift!

How to Give Stocks to Others for the Holidays

Energized by this idea? Here's how to give stocks to others for the holidays. 

Gifting to Kids

As a parent or grandparent, you may want to consider purchasing stocks for kids. You can do so through a custodial brokerage account, called a Uniform Transfer to Minors Act (UTMA) or a Uniform Gift to Minors Act (UGMA). (The name of the custodial brokerage account depends on the one offered in your state.)

When your child turns 18 or 21 (again, it depends on your state's rules) he or she gains full control of the money. That's the most serious downside to an UGMA or UTMA. If you expect kids to use the money in a responsible way, they can ignore your advice and spend all the money irresponsibly instead of, say, paying for education.

One way to get kids interested in the UGMA or UTMA stock is to relate it to companies they're interested in. For example, if your child loves the Under Armour brand, you can buy Under Armour (NYSE: UAA) stock. 

If you'd rather gift a child shares that go toward education, you may want to consider investing in a 529 plan. Anyone can purchase shares in a 529 plan as long as you name your beneficiary. You can get tax benefits, both at the state level and when you use the money to pay for qualified education expenses for a designated beneficiary.

Gifting to Adults

You can also buy stocks for adults! It can be as simple as getting their brokerage account information and transferring money from your brokerage account to theirs. If you both invest through the same brokerage firm, the process can be pretty simple. 

However, when you transfer money from one brokerage firm to another, you'll need to get instructions from the receiving institution to understand the process of a stock ownership transfer. You'll likely need to compile your account name and address, your account number and shares you want to send. You'll also need to provide the recipient's account name, Social Security and account numbers as well.

Gifting to a Charity

Once you give stocks to your beloved family members, you may want to consider a stock charitable donation next. You can do this in a few simple steps: 

• Step 1: Find out about the name of the charity's brokerage account and get the brokerage account information. You'll also likely have to complete some paperwork in order to authorize the stock donation.
• Step 2: Talk to your own brokerage firm to learn what it needs to transfer your shares, if necessary. 
• Step 3: Allow plenty of time to get the process completed by the end of the year. Many institutions require you to have stock donations go through by December 30, so remember that you won't be able to request the process on December 29 and count on it going through in time.

Give the Gift of Financial Freedom

Skip long waits in line, supply chain issues and all the other hassles that often come with holiday gift-giving. While it probably won't excite young kids as much as a new hoverboard, rest assured that they'll appreciate the compound interest later in life. Give stocks for a great financial start in life (for kids) and a continued push toward financial freedom (for adults). It's one of the most meaningful gifts you can give.