Holiday season may be a memory, but that doesn’t mean you won’t have to buy any other gifts in 2016. All those birthdays, anniversaries and special moments should be properly celebrated – and this will most likely involve giving presents as well.
Investment gifts are a great option when you want to offer more than just money. These gifts offer long-term benefits and show that you care about one’s future – which makes them perfect for a wide range of people. From college students to your parents or friends who are of the same age as you, most people will appreciate receiving something that might actually bring them profit for the years to come.
Of course, buying real estate or creating an entire business to offer as gift is out of discussion for the vast majority of people. And yet, that doesn’t mean that you cannot afford giving lucrative presents to those close to you. Here are 5 ideas to inspire you to give more in 2016:
This is one of the most classic financial group ideas, but before you scroll down, think of why it’s something everyone suggests. There’s a very good reason stocks remain in the top preferences when it comes to investment ideas: they work.
Yes, you need to do some proper research and you need to make sure that you put your money (or, better said, your gift money) in the right place. Even so, stocks don’t come without their own bundle of trouble. Giving stocks is a great idea when you want to offer them to a kid or teenager and encourage investment from a young age (especially if the stocks are in a company the kid can related to – such as Disney, for example).
However, please pay attention to the fact that buying single shares can prove more expensive than you thought. Aside from the actual stock price, you will most likely have to pay an extra fee for the stock delivery too. Also, it might be difficult for the owner of the single share to sell it later on, so you should definitely consider this before buying.
Somewhat similar to stocks, mutual funds are also a good option when it comes to gifts. Their main advantage is that they are professionally managed, so they stand a much better chance of being profitable for their owners. Furthermore, they offer the chance of diversification, so they might be a lot more secure than usual individual stocks or bonds.
However, please be aware of the fact that mutual funds may show disadvantages too (e.g. they may be subject to certain types of taxes unless they are tax-sensitive or held in tax-sensitive accounts). Inform yourself on these issues and put everything in balance before making the final call!
529 Contributions or Roth IRA Funding
Depending on the age of the receiver, your gift could be something that will help him/her have a more secure future. For example, if you plan on offering something to a teen, you can make a 529 contribution on his/her behalf.
The rules on how you can do this may vary from one state to another, so you need to do some research before making a move. In some states, these gifts can be tax-deductible, while in other states grandparents are not allowed to make contributions on 529 accounts opened by the children’s parents.
Furthermore, if the receiver is older than college age, he/she might be more interested in having a stable IRA fund, so you might want to consider contributing towards that. Of course, it is allowed to fund an IRA for someone who is underage, but the amount of money you offer cannot be larger than the sum of money he/she makes every month.
For very young people, I suggest 529 contributions – in the end, there’s nothing more valuable than a good education and such a contribution can be extremely helpful when it comes to this. Considering how expensive higher education can get and considering how burdensome student loans can get, the receiver of such a gift will be more than happy for your idea (if not now, a few years from now for certain).
Don’t want your gift to be consisted of stocks or contributions? Offer a book that will teach the receiver how to make their own investments. There are tons of books on this topic and they are more than suitable for beginners in the “art of investment” too, so if you know someone who has been considering this, it would give them a good head-start.
Same as with just about any other type of gift or investment, remember to check with the book’s reviews first. This will help you pick a book that’s genuinely helpful instead of something that doesn’t offer actual, actionable and valuable advice.
Giving money to charity is always a great idea. It may not bring you benefits, but it can be of a tremendous help to someone, somewhere who needs it. Giving money to charity is a wonderful option especially when you know someone who would actually want to do this – and it can also make them feel like they are part of something better.
What’s more, this can be an excellent idea if you want to show your kids the value money can have and how important it is to know how to give, just as much as you receive and save as well. In the end, being financially stable and wise should never be about having money, but also knowing how to share it with those who need it the most.
Author Bio: Savanna Oconner is a frugal-living promoter from Memphis. In her spare time, she enjoys writing about the personal finance tips and going green.