Brooke on Tour

Kids will never think of investing in Sony, Reebok, Hershey, Toys "R" Us, or Wal-Mart unless you introduce them to the idea — and the sooner the better. Sure, a $100 investment gift to a 10-year-old may not be as glamorous or immediately gratifying as a "Jewel Girl" Barbie or a Razor Scooter with linear front suspension. However, sit down with the youngsters on your list and do the math. You'll teach them the fundamentals of investing — that $100 invested is much more worthwhile than $100 spent on a toy — and hopefully they'll keep that lesson in mind throughout their lives. Here are some more ideas for adding investment gifts to your holiday giving repertoire.

1. DRIPs are a simple way to get started.
   Dividend reinvestment plans (DRIPs) or direct stock purchase plans (DSPs) are available from nearly 3,000 U.S. companies. Popular household names like Coca-Cola, Kellogg's, Kodak, and Intel can be purchased without a broker through Web sites such as Netstock Direct. One share of stock is usually the minimum required for opening an account.

2. Try stock certificates ... but beware of high fees.
   Getting a stock certificate to put in the stocking on Christmas morning can cost a pretty penny if you buy it from one of the large wire houses like Merrill Lynch, Charles Schwab, or PaineWebber. In addition to an exorbitant commission that can vary from $65 to $120 for the purchase of an "odd-lot" — less than 100 shares — they may penalize you with a hefty fee, as high as $100 just for the stock certificate documentation. With today's new "do it yourself" technology, you can avoid this expense and aggravation by purchasing your shares through two new Web sites, ShareBuilder or BUYandHOLD. Commissions are only $2 and $2.99 to purchase one share and $35 for the delivery of the stock certificate. Important note: Don't wait until the last minute to do this. The process of buying and delivering the certificate can take up to two weeks.

3. Try a starter fund.
   If you don't want the hassle of dealing with stock certificates, try the Stein Roe Young Investor Fund. This aggressive growth mutual fund has turned in a 24.5 percent average annual return since it started in 1994. They invest in high-tech companies like EMC and Intuit and household names like Safeway, Citigroup, and Johnson & Johnson. Only $100 is required to open the account and you have the option of adding money on a monthly basis via an automatic bank account deduction. More important, Stein Roe sends a monthly newsletter to children, educating them about how stocks work and why investing is the easiest way to get rich over a lifetime. This is an excellent option for grandparents and relatives who want to give more than the traditional U.S. savings bond or certificate of deposit. (Note: Buying a $100 one-year certificate of deposit at the current 5 percent average interest rate, would only yield a $163 average after 10 years.)

4. Remember that time is on their side.
   When it comes to investments, kids have the one major advantage that the rest of us envy: time. As we all know, all investments need time to grow. Over a lifetime, they will live through more market cycles than we adults can imagine and therefore can afford to wait for recovery of a stock or a market in transition. For a 10-year-old, that first $100 gift invested in an aggressive growth stock with a 20 percent annual growth rate would be worth $910,044, if left alone, by the time she turns 60. That kind of gift sure beats a Sony PlayStation 2.