Mellody's Mail: Stocks for Kids

— -- Q U E S T I O N: I would like to buy each of my kids stock for Christmas, but I can't seem to find any information on how to do this. Any advice?

You have a couple of options in terms of where and how to purchase stock. You can either purchase stock through a broker or, in some cases, directly from the issuing company. In addition, you can use an online service, such as www.sharebuilder.com or www.netstockdirect.com, which offers a convenient and low-fee way to purchase individual stocks.

In addition to purchasing stocks as gifts, you should also consider mutual funds. There are many funds which are excellent long-term investments for your children and come with the added advantage of diversification and professional management. There are a few funds specifically geared towards children, such as Liberty Young Investor Fund (Ticker: SRYIX) and USAA's First Start Growth Fund (Ticker: UFSGX) which provide child-friendly statements and reports designed to teach your children about the funds themselves as well as the basics of investing.

Although these funds provide excellent educational materials, it is essential you do your research to make sure the fund you choose has a strong long-term track record, low fees and a consistent investment style.

A gift of stock or mutual funds comes in a small box, but makes a big impact. I like to think of it as a present for the future.

E-mail Mellody with your personal finance questions.

Mellody Hobson, president of Ariel Capital Management in Chicago, is Good Morning America's personal finance expert. Click here to visit her Web site, ArielMutual Funds.com. Ariel associates Aimee Daley and Matthew Yale contributedto this report.

You have a couple of options in terms of where and how to purchase stock. You can either purchase stock through a broker or, in some cases, directly from the issuing company. In addition, you can use an online service, such as www.sharebuilder.com or www.netstockdirect.com, which offers a convenient and low-fee way to purchase individual stocks.

In addition to purchasing stocks as gifts, you should also consider mutual funds. There are many funds which are excellent long-term investments for your children and come with the added advantage of diversification and professional management. There are a few funds specifically geared towards children, such as Liberty Young Investor Fund (Ticker: SRYIX) and USAA's First Start Growth Fund (Ticker: UFSGX) which provide child-friendly statements and reports designed to teach your children about the funds themselves as well as the basics of investing.

Although these funds provide excellent educational materials, it is essential you do your research to make sure the fund you choose has a strong long-term track record, low fees and a consistent investment style.

A gift of stock or mutual funds comes in a small box, but makes a big impact. I like to think of it as a present for the future.

E-mail Mellody with your personal finance questions.

Mellody Hobson, president of Ariel Capital Management in Chicago, is Good Morning America's personal finance expert. Click here to visit her Web site, ArielMutual Funds.com. Ariel associates Aimee Daley and Matthew Yale contributedto this report.

Although these funds provide excellent educational materials, it is essential you do your research to make sure the fund you choose has a strong long-term track record, low fees and a consistent investment style.

A gift of stock or mutual funds comes in a small box, but makes a big impact. I like to think of it as a present for the future.

E-mail Mellody with your personal finance questions.

Mellody Hobson, president of Ariel Capital Management in Chicago, is Good Morning America's personal finance expert. Click here to visit her Web site, ArielMutual Funds.com. Ariel associates Aimee Daley and Matthew Yale contributedto this report.