Skip the mall this year and shop for gifts at the stock market

If you’re looking for great prices on holiday gifts this year, skip the mall and head to the stock market.

The deals are real and long after the toys are broken and the clothes are stained, faded and outgrown, you keep on gift-giving.

This is not an encouragement to plow into stocks during a bad year in the market; investors must make those investment decisions based on their portfolio, financial plans and goals, and feelings about the market.

But stock gifts should be hot this year as the stock market has put them up for sale, giving them greater long-term potential. Plus, they’re never the wrong size.

Not only is it one of my favorite gift ideas, it’s also one of my biggest personal financial success stories, because I started giving my daughters stock as soon as they got social security numbers.

My girls were born in the early nineties; stock donations were hard to do back then.

A few hundred dollars wouldn’t buy the round of 100 shares needed to get lower commissions. Discount brokers that started in the mid-1970s were not adept at helping the microinvestor, someone who spent years pouring small amounts into an account.

Mutual funds were a potential alternative, but they didn’t offer the lessons that stocks offer about ownership, controlling assets you think are valuable, and more.

A child can understand that they love McDonalds and may want to own it; not her to get that context from an index fund with dozens or hundreds of securities.

Until the kids were old enough to appreciate what came in a box instead of ripping wrapping paper and having a new doodad, I let the grandparents buy the presents while I enriched their futures.

As the kids grew and needed something more tangible and direct from me, I spent more on typical gifts and put less in their wallets, but I still set aside a few hundred dollars a year.

Through regular conversations about their mini portfolios, my kids learned about investing, compounding, dividends, the time value of money, and much more.

By the time they were 10, my kids could talk about stocks in rudimentary ways. They discussed reasons to buy a company and got involved in decisions about adding to an existing holding company or adding something new to the portfolio.

The girls also knew this was their money, to use for whatever they wanted as an adult; my promise was to make contributions until they turned 21 and took over account management for themselves.

The girls, now 31 and 29, have seen the benefits of long-term investment and are particularly keen to keep the money in place and work for them.

Mission accomplished.

These days, stock gifts are easy, which is exactly why it should be a staple for anyone looking to raise money-conscious children or grandchildren.

There are a number of apps that allow investors to trade small dollar amounts in fractional shares, and programs such as Stock Slices from Charles Schwab & Co., Stocks by the Slice from Fidelity Investments, or other plans from traditional brokers.

Just pick a favorite company or two and a dollar amount (as little as $1, depending on the brokerage/app involved), set up a gift-to-minor account, and you’re good to go.

It is ideal for grandparents or parents who want to teach lifelong lessons about money and investing.

For my kids, I wanted businesses they would recognize and understand; we talked about owning McDonalds and not Burger King and how we as shareholders benefited when someone made the decision to go to Mickey Ds instead of its competitors.

They moved from toy makers and food companies to computer companies and electronics manufacturers as their interests changed.

At 21^st birthdays, each of my girls took full control of their wallets; both had over $20,000, pretty good for just a few hundred dollars set aside each year.

That money was the accumulated value of holiday and birthday gifts not given, the monetary value of the things that never made it to the basket of old toys, the pile of underappreciated expressions of love or items that broke or was played on a trip that ended in the city’s dump.

Meanwhile, those portfolios are still managed conservatively; my kids have barely touched the money, in part because they love the freedom it gives them.

When my oldest daughter took a new job halfway across the country this year, she told me that the portfolio gave her the courage to take the step, knowing that if the radical job change she was pursuing didn’t work out, she wouldn’t be left broke and scrambled.

The girls have said the whole growing-up-with-investment experience, from having the bills to talking about how to manage them, has made them the envy of friends and classmates.

My only regret is that I wasn’t more frugal with the holiday expenses so I could have made bigger set-asides to give them an even better start.

I will not make the same mistake with my future grandchildren, but there is no reason for anyone to have a similar problem now.

If you’re afraid to do this because you don’t have any investment knowledge, this is your chance to learn about it together.

If your child/grandchild has shown an interest in a particular trade or profession, investments can help foster that.

Be creative; there’s almost no limit to what you can offer your kids with a few dollars worth of stock.

But take advantage of the tools that exist now to give your family a head start on the financial future. There is no bad move, no wrong investment; even lose learning lessons.

And take advantage of a market that has discounted shares by about 15% this year. In a year when there aren’t many cost-sensitive, cash-savvy deals to close, stocks as a gift are a bargain.