Buying certificated shares for a relative

gadgetmind

My FIL wants to buy his granddaughter (my niece) some shares for her 21st Birthday.

I observed that shares in a single company was high risk and suggested an Investment Trust. Given that it's intended that she hold these long term, I also suggested that maybe an Emerging Market IT such as Templeton Emerging Markets (TEM) might work.

1) What's the best way for him to buy certificated shares in an IT? Is buying for a third party easy/difficult?
2) Any other suggestions for shares in a single equity for long-term holding? I did consider personal assets, but it's a trifle staid and at £340 per share, she won't get many!

I am uncomfortable suggesting a single share to him, particularly with sentimentality involved, but he's asked me a few times and I've dodged the question. Now he's asked via SWMBO (She Who Must Be Obeyed) aka his daughter and my wife!

Resistance is futile.

Help!

P.S. He didn't take to my suggestion of Diageo, so I'm already in trouble for that!

agrinnall

Looking at the popular shares list on the BBC website it's hard to pick one that you can be certain will still be there in 20 years. However, I think BT and M&S ought to be pretty safe (I had both in my portfolio but took the profit on BT yesterday).

gadgetmind

BT is difficult: comms down wires; really? M&S is on my personal watch list, but they've been cyclical, and even at times downright dodgy, hence me looking to collective investments.

agrinnall

gadgetmind wrote: »

BT is difficult: comms down wires; really? M&S is on my personal watch list, but they've been cyclical, and even at times downright dodgy, hence me looking to collective investments.

What do you see coming that will replace the vast infrastructure owned and operated by BT without them also being a major player in the replacement? Unless there is a big increase in the ability to transmit large volumes of data at high speed wirelessly then I'd still see physical networks as being necessary.

gadgetmind

agrinnall wrote: »

What do you see coming that will replace the vast infrastructure owned and operated by BT

Increasingly people are eschewing fixed lines and desktops in favour of mobile devices, and LTE will take this to the next level.

I haven't even put BT in my HYP portfolio never mind my growth one.

oldvicar

gadgetmind wrote: »

..... Given that it's intended that she hold these long term, .....

Why is long term holding a given ?

Seriously there will be lots of reasons why, once she's got them, and from a purely financial viewpoint, your niece ought to want to sell them in the not too distant future.

For instance: to fund a house deposit, or to start a balanced portfolio - perhaps even an ISA. Or a pension. Or many of the other things a 20-something or 30-something needs.

So one approach might be to think of a share which you would expect to be not particularly volatile in the short/medium term and not having much spread. A utility perhaps?

But because this is a special gift from FIL and one he hopes your niece will keep, whilst he is probably thinking of it as an investment what is really needed is something 'special' which will from time to time keep reminding your niece of FIL's love and generosity, whatever the financial performance.

So first and foremost its got to be a share that comes with shareholder 'perks' which she will appreciate. And within that trying to avoid a financial dog.

Someone has already mentioned M&S (who send modest discount vouchers). But I guess you know your niece's shopping habits better than me. Next maybe? Or one of several brewery chains?

gadgetmind

oldvicar wrote: »

Why is long term holding a given ?

My first response was to ask about timescale.

Seriously there will be lots of reasons why, once she's got them, and from a purely financial viewpoint, your niece ought to want to sell them in the not too distant future.

That's why I'm inclined to suggest Personal Assets or Capital Gearing Trust. RIT would once had been on this list, but 2011 wasn't exactly their best year compared to their conservative/conviction peers.

So one approach might be to think of a share which you would expect to be not particularly volatile in the short/medium term and not having much spread. A utility perhaps?

So first and foremost its got to be a share that comes with shareholder 'perks' which she will appreciate. And within that trying to avoid a financial dog.

Someone has already mentioned M&S (who send modest discount vouchers). But I guess you know your niece's shopping habits better than me. Next maybe? Or one of several brewery chains?

I did consider SSE, CNA or NG, and MKS could work. Maybe I need to come up with "conservative", "steady income", "perks" and "long-term aggressive" suggestions and leave him to pick?

JamesU

gadgetmind wrote: »

I did consider SSE, CNA or NG, and MKS could work. Maybe I need to come up with "conservative", "steady income", "perks" and "long-term aggressive" suggestions and leave him to pick?

Feel purchasing individual shares for this is not ideal, too much risk even with the above suggestions if being held long term. Guess plenty of other options depending on amount being invested but this is not mentioned.

Thinking outside of the box for a perk/value rather than serious investment, punting Thomas Cook on the basis they will not go under could be interesting for a laugh.....500 TCG (approx £65), after 6mths 10% off Thomas Cook (possibly Going places and Co-Op travel also) and various other subsidiaries:

"Shareholders, subject to the restrictions set out below, are entitled to receive a discount of 10% off the latest retail high street price of any holiday booked under the following brands: Airtours, Aspro, Club 18-30, Cresta, Manos, Neilson, Sunset, Sunworld Holidays, Swiss Travel Service, Thomas Cook, Thomas Cook Style Collection, Thomas Cook Signature and Thomas Cook Tours. In order to benefit from this service, shareholders should call the telephone number detailed below:"

http://ara2009.thomascookgroup.com/shareholder_info/index.html.

If TCG ever recover, could be interesting, if they go under a good lesson in investing for the niece. Would have cost a lot to do this some time ago (couple of £K) and a fun perk for a young traveller maybe.

JamesU

alanq

oldvicar wrote: »

Or one of several brewery chains?

Given FiL's response to the suggestion of Diageo perhaps not.

JamesU wrote: »

"Shareholders, subject to the restrictions set out below, are entitled to receive a discount of 10% off the latest retail high street price of any holiday booked under the following brands: ...

May not be much use if the "high street price" is more than 10% above the price available online!

I am extremely dubious about buying shares for someone else. Unless the sums involved are large they may cause more hassle than what they are worth. I assume that a certificated share is one for which a piece of paper is issued. By holding a share in this way instead of via a nominee account the shareholder will appear on a publicly viewable register of shareholders and may attract the attention of scammers and other undesirables. On the other hand sometimes perks are not available to shares held in a nominee account.

gadgetmind

Thanks all for the feedback. It is much appreciated as this type of investing is well outside my comfort zone as I like to diversify. (Let's not mention the tech shares, eh!)

What about the mechanics of getting a share certificate for niece?

Masomnia

Personally I think the Diageo is a good idea!

Isn't the point that she'll learn about the ins and outs of investing, dividends, financial reports etc.? In the hope that it'll make her more money aware in future. Plus it's quite funny!

I wouldn't be disappointed as such by a sensible share for my birthday, but if I was given a certificate for Capital Gearing Trust or such like I don't think it would inspire me much. I imagine he'll get a 'Errr? Who?' Reaction from the niece. 'Yes, but it's trading at a discount to the NAV! Cool, eh?' 'Err, yeah?'

If shares in Diageo stoke an interest in the subject that will stay with her, that in my view would be a better 'investment'.