The Gift of A Good Investment
The holidays are here and, undoubtedly, you’re making a list and checking it twice. You’ve survived Black Friday and Cyber Monday and there is still plenty of shopping, wrapping, and gifting to do.
Gift givers looking to make an impression should consider giving the gift of an investment this holiday season. It’s a wonderful idea. Size and fit won’t matter, there will be nothing to wrap, and your gift will, literally, keep on giving for years to come.
Here are my favorite financial gift ideas.
For Your Favorite Teen
Being the mother of two teenaged boys, I know how much stuff the modern kid can have. Bedroom closets overflow with toys and clothes and electronics. For the kid that doesn’t need anything – consider making a contribution to a ROTH IRA in his or her name. If you remember my post on Teens and Money from April, the earlier an IRA is opened – the better. The benefits from compounding are exponentially better the earlier a ROTH IRA is opened and starts receiving contributions. Remember, the limit to annual contributions to a ROTH IRA is $5,500 or the child’s earned compensation, whichever is less. Also, be sure to check if they have already made a contribution to avoid possible excess contributions. There is no contribution too small! And it’s the only gift that I can think of that they will still be grateful to have received decades into the future.
For The New Baby
For the first couple of years of a baby’s life, they are too young to remember the holiday season. So, before they get older and the pressure of getting the latest hard-to-get toy mounts, perhaps a contribution to a child’s 529 College Savings Plan would be the greatest gift of all. Again, contributing to a fund like this at an early age allows for your gift to be all the more valuable. In this case, compounding for a full 18 years before that first college tuition bill arrives in the mailbox. Moreover, sending the message from an early age that college is possible is the greatest gift of all.
For The Person Who Has Everything
A donation made in the name of the recipient is a touching gift that can change the lives of so many. Plus, if the receiving charity has been designated 501(c)(3), your holiday budget suddenly becomes tax deductible! Brilliant!
Prior to investing in a 529 Plan investors should consider whether the investor’s or designated beneficiary’s home state offers any state tax or other benefits that are only available for investments in such state’s qualified tuition program. Tax treatment at the state level may vary.
This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.