Ask the Fool

QHow can I buy small amounts of stock to give to my grand children?

- M.K., San Ramon, Calif.

AYou can open a direct investment plan account with one or more companies. Often called DRIPs or DSPs, they permit you to bypass a broker when buying stock, and hundreds of companies offer them. Learn more at www.dripcentral.com and www.fool. com/School/DRIPs.htm. Some newer (but often more expensive) options are www.registerstock.com, www.oneshare. com and www.frameastock.com.

Q Should my 10-year-old invest in savings bonds?

- B.B., South Bend, Ind.

A It depends. If the money is for college, then it has about eight years to grow. If it's for her adulthood, it might grow for a few decades.

Investing in "safer," less volatile investments such as savings bonds or CDs will give you a modest return and minimize losses. But over most long periods of time, stocks will outperform bonds and CDs, so consider them, too. Their downside is that we can't know how the market will fare in the next months or years. In general, though, the longer you leave your money in stocks, the more likely you'll be to do well. With stocks, it's best to invest money that you won't need for at least five years (or 10, to be more conservative).

To invest in stocks, perhaps start with an index fund, such as one based on the S&P 500. You might also invest in the stock of a few companies that your children know and like, such as Hershey, Disney, PepsiCo, Wal-Mart or Microsoft. Then you can follow the fortunes of the companies and your investments together, as they learn about the stock market.

Learn more at www.savingsbonds. com, www.indexfunds.com and www. fool.com.

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