Stuff Junior's Stocking With a Stock

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Show of hands: What kid doesn't like getting cash as a gift?

That's what I thought. So explain to me exactly why people would bother setting their alarm clocks so they can be in the Wal-Mart parking lot at 5 a.m. the day after Thanksgiving, when the perfect holiday gift can be had at the drive-through ATM on your way home from work Wednesday night?

Maybe opening an envelope to ogle a check from Grandma isn't exactly one of those magical moments. But when the candy-cane holiday high wears off, a thoughtful financial present will bring smiles for many holidays to come. And, more practically, let's be honest: Licking an envelope is a lot easier than wrapping an awkwardly shaped present that no one will remember two months from now.

If forking over a few crisp $20s to Junior feels a tad gauche, read on for a few ideas to dress up that gift of green and make it multiply.

Give stocks, not stuff
Kids have the one thing that all of us adults wish we had: time. They have time to let their money grow — to weather the ups and downs of the stock market and to benefit from an ultra-long-term holding period.

All right ... a stock isn't exactly a Wii or an iPhone. But when you explain to a kid that buying a share of a stock makes him or her a part owner of the company, watch the eyes light up. (A seat on the board, however, may have to wait until after the kid's old enough to drive.)

There are many ways to give the gift of stock to minors. If presentation is key, then presenting a child a framed stock certificate can be a nice touch. However, you'll pay anywhere from $40 to $120 to get a paper certificate and another $30 to $120 to get it framed. Oneshare.com is one of the cheapest options if you want to go this route, but you'll still pay a pretty penny.

My advice: Skip the fancy presentation — or handcraft your own — and invest the cash you'll save.

Kid-oriented investments are everywhere
As for what to buy with a gift of cash, why not get Junior's input?

Point out how every moment of every day, he or she is presented with investment opportunities, from breakfast (General Mills) to lunch (McDonald's) to bedtime (Disney) to a weekend stroll at the mall (Abercrombie & Fitch) and taking in a movie (IMAX).

Can't decide between Disney, McDonald's, Target, or Wal-Mart? You can buy 'em all with the iShares Dow Jones US Consumer Services Sector Index Fund, which holds more than 250 companies. The kids will be pointing out businesses they own at every strip mall.

It really is the thought that counts
Even if you can't afford to buy more than one share of stock, or if the investments you pick don't do so hot, consider that it's not just the thought that counts — it's the message that you send. (And, really, do people still blame you for buying them a Betamax player instead of a VHS model back in the day?)

There's nothing more touching than knowing someone has high hopes for your future and the wherewithal to present a gift designed to pay continual dividends throughout time. Even better, cash or cash equivalents save you the embarrassment of fumbling for a gift receipt when your last-minute panic gift falls flat.

Fool.com writer Dayana Yochim regrets not investing those quarters her Aunt Minnie collected for her every year.