While they’re not as much fun as Baby Yoda or an L.O.L. Surprise! Doll, giving your kids investment gifts for the holidays can provide them with value that lasts a lifetime. If you’re considering a holiday gift of stocks or another investment asset for your children, here are a few things to keep in mind.

How to Invest for Kids

Depending on your goals for your child’s investments, you have a few different options:

529 Accounts

Would you like to help your children or grandchildren pay for college? Consider investing in a 529 account. This is a tax-advantaged savings plan that lets friends or family members invest for a child’s future education costs.

You save post-tax income in a 529 account, choose from a range of portfolio investments, and your money grows tax free. You’ll never pay taxes on funds in a 529 as long as they’re used to pay for qualified education expenses, like tuition, fees, and room and board at colleges, universities or even trade schools. If the child attends private school before college, up to $10,000 per year can be withdrawn from many 529 plans to pay for secondary school tuition.

State governments partner with financial services firms to sponsor 529 plans. Depending on your state, you may be eligible to deduct contributions made to a 529 account from your state income tax bill.

Investment options vary from plan to plan, and they’re generally more limited than you might find in a 401(k) or individual retirement account (IRA). You’ll typically choose from a range of portfolios made up of index funds or exchange-traded funds (ETFs). Some may even offer target-date funds tailored to when your child will graduate from high school.

529 plans offer one important bit of flexibility that other investment accounts for kids lack: The account owner controls the account and can change beneficiaries, if needed. For example, if you own the account and your child, the account’s intended beneficiary, decides not to go to college, you can switch beneficiaries so another relative can use the money for their education. This could be a younger sibling or even yourself.

Anyone can contribute to a 529 plan, including parents, relatives and friends. You can generally gift up to $15,000 per child per year without owing taxes. If you want to make a contribution for a niece, nephew or grandchild, contact the parents and ask if the child already has a 529. To open 529 accounts for the children in your life, research offerings in your state, products at major brokerages like Vanguard or Fidelity or even portfolios managed by robo-advisors like Wealthfront.

Custodial Brokerage Accounts

If you want your investment gift to be available for any kind of use, not limited to education, consider a custodial brokerage account for your child. Formally referred to as a Uniform Transfers/Gifts to Minors Act (UTMA/UGMA) account, custodial brokerage accounts provide you with very wide latitude to invest in stocks, bonds, mutual funds and ETFs. The ability to purchase individual stocks may be appealing to parents who’d like to give their children partial ownership of particular companies they’re interested in.

Unlike 529 plans, funds in custodial accounts can pay for expenses other than higher education as long as they benefit the child, such as if they’re used for music lessons, sports team fees or even clothing. The child who is named as the beneficiary of the account owns all the funds. This means you cannot transfer the funds to a sibling, like you could with a 529 account.

This also means that the beneficiary gets full control of the custodial brokerage account once they reach a certain age—from 18 to 25, depending on your state. After that, they can spend the funds however they wish. Since the account belongs to the child, it’s also factored into financial aid eligibility and weighs much more heavily than assets held in a 529 account.

You can open a custodial brokerage account at any major brokerage. Microinvesting platforms like Stash and Acorns offer custodial brokerage accounts that let you get started with as little as $1 or $5, respectively. Like 529 accounts, you can only gift a child up to $15,000 per year before you’re subject to taxes.

Individual Retirement Accounts (IRAs)

You may not associate IRAs with children, but they can be powerful investing tools for kids. As long as your child has some sort of income—such as a summer job as a teenager—you can contribute up to the lesser of $6,000 or the amount they earned that year into an IRA for them.

Roth IRAs—where contributions are made with money you’ve already paid taxes on—are particularly useful for minors, who are likely to be in the lowest possible tax bracket. Earnings grow tax-free, and money in the account can be withdrawn without taxes or penalties as long as your child has reached federal retirement age (currently 59 ½). Before then, all contributions can be withdrawn tax and penalty free for any reason. Roth IRAs can also be used like 529 accounts: Contributions and earnings can be used tax and penalty free for educational expenses.

As long as your child or grandchild earned income this year, you can open a Roth IRA for the child at any major brokerage and invest in stocks, bonds, ETFs and mutual funds.

Direct Stock Purchase Plans

With many forms of investing, everything happens online. There’s nothing tangible about the process that a child could see or hold. But there is one workaround that might interest some holiday investors: You can purchase stocks directly from selected public companies, some of which may still offer physical certificates recognizing stock purchases.

For example, kids who are obsessed with Disney World and The Mandalorian may be excited to receive a certificate that says they’re a shareholder of The Walt Disney Company (DIS). Through the Walt Disney Company Investment Plan, you can purchase shares directly from Disney. You must make an initial $200 investment or authorize monthly deductions of at least $50 for a minimum of four transactions. Once you buy one or more shares, you are eligible to purchase a collectible shareholder certificate for $50.

This type of investing is likely to resonate with children more than other options, but it has drawbacks. You can only buy or sell shares through the company’s investment plan, and those tend to charge higher fees than you would pay investing through a brokerage.

In addition, if you’re trying to help a child build wealth, individual stocks may not be the best option. Single stocks can be more volatile than mutual funds, ETFs or holdings at a robo-advisor. This means your child may see greater changes in the value of their money when it’s invested in an individual stock than they would with mutual fund or ETF shares.

That’s why Thomas Henske, a certified financial planner (CFP) with Lenox Advisors and father of two, recommends you use a gift of investments to talk about diversification and types of assets.

“I believe that trying to keep your child focused on asset classes, rather than individual stocks, has a better long-term benefit,” he says. To give them ties to particular stocks, you can still highlight the companies your child owns through ETFs and mutual funds. Disney, for example, makes up about 1% of most S&P 500 index funds.

Why Invest for Kids?

Beyond cutting down on clutter around the house, purchasing stocks and other securities for your children during the holiday season has plenty of benefits.

Teach Kids Financial Literacy and Investing Skills

Investing for kids is a great learning opportunity for them, according to Henske.

“Just like good exercise and nutrition habits, money habits are most successfully built at a younger age,” he says. “Getting a child interested in investing starts to build a foundation of inquisitiveness for them as well as building confidence in speaking about money. For many adults investing creates anxiety and has them put off putting their cash to work. This reduces its growth and compounding, which we know is hazardous to building a retirement nest egg.”

To help prevent this from happening later in life, sit down with your child to discuss the investments you purchased for them. You’ll want to talk about the importance of letting the money grow untouched, how to choose securities and how some simple changes and sacrifices, like forgoing a new video game and investing that money instead, can affect long-term results.

To help motivate them, Henske recommends painting investments in the context of a specific goal, like a vacation or a car.

“Teaching a child early how much things cost helps them gain perspective,” he says. “Letting them figure out their time horizon until they will want to buy a car and matching that to their investment choices is a great conversation.”

Harness the Power of Long Investing Timelines

By starting early with investments, you position the kids in your lives for lifetimes of compound growth. That means even small investments that you make today can lead to big fortunes later in life.

Consider these hypothetical situations: Each year you invest the average $500 parents typically spend on Christmas gifts per child and earn an average return of 8% on your investments, which is about average for the S&P 500, accounting for inflation.

By the time your child reaches 18, that annual investment has grown to $18,725.12, almost $10,000 of which is pure investment returns. If they cashed out to help pay for college, it would cover more than half of the average $29,850 in student loan debt college graduates leave school with, according to The Institute for College Access & Success.

What if they decided to wait until they were ready to buy their first home? Waiting until they turn 33, the median age for first-time homebuyers in America, would let the investment grow to almost $60,000—and that’s assuming you didn’t contribute a cent after they turned 18. That’s a pretty sizable home down payment.

And if your child waited until they were 62, the earliest you can claim Social Security right now, those childhood investments would have grown to over half a million dollars. That’s all from $500 investments each of the first 18 years of their life, or $9,000 total. Not everyone, of course, can afford to invest $500 a year for each of their kids, but even a $100 annual investment turns into $3,745.02 after 18 years, almost $12,000 at 33 or $110,000 at 62.

Should You Buy Your Child Stocks?

If you’re wondering how to invest money for your child, setting aside a portion of what you would have spent on Christmas gifts is a great start. By purchasing stocks, bonds, mutual funds, or ETFs for them, you grant your children not only partial ownership of some of their favorite companies. You also give them an important head start for their financial future.