Question: Why do people buy stocks for their kids?
I remember when I was a kid (90s) a lot of my friends had their own stocks, purchased, of course, by their parents
just wondering, why the heck didn't parents just buy their own stocks? why put it in a child's name
Answer:
so their kid will have some money later on in life.
Inflation.
Money LOSES value.
Well chosen stocks can be expected to ay least keep it.
Look up a '90' Newspaper at your library.
Compare what a 'grocery dollar bought then as opposed to
what it buys today.
Not too long ago the investment gift of choice was US Savings bonds. But since the early 90's interest rates have been low and so it takes forever for the bonds to mature. I have some that are like 20 years old that cost $25 to buy and will only be worth $50 at most. But they're not even close to being worth $50 yet so, even though that was a safe investment, there's not much of a payoff (unless I had a ton of them).
With stocks, typically the longer you hold on to them, the more they will be worth. Of course there will always be exceptions and you could lose big. But mostly you will gain a respectable amount in the long run. So your parents or other relatives were smart IMHO to buy you stocks as a savings vehicle.
EDIT: If you know people who are putting stocks in their kids' names and actively trading them as if they were their own, that is to avoid paying capitol gains taxes. I'm no fancy schmancy lawyer, but that sounds illegal to me. They should probably not do that.
Hopefully, so their kids might have something worth something when they turn 18. Beats buying them a bunch of cheap plastic crap made in China. Actually, probably should be buying them Chinese stocks. Just kidding. As a matter of fact just bought my grandson some stock.
To give their children a head start in life, and you know... help them maintain the social status and place in the economic hierarchy that the family has worked so hard to accomplish. If you think we are any different than the caste system in india, you are fooling yourself. That's just the way it is.
I wouldn't even want to know a parent that used his or her money all for themself, while they give their kids jack-**** in life.