The Most Appreciated Gift for Kids

gift for kidsThe gift that receives all the attention on Christmas day probably won’t be a Savings Bond or a contribution to a 529 savings plan.  It will definitely become the most appreciated over the years.  Especially prior to tax season, family members can invest in the future of their youngest family members.  This will make their future more secure when looking for a first car, college, or a house down payment.

The common Savings Bond can be a very good gift as they grow over time by earning interest.  Other investments (treasury bills, notes, bonds, etc.) like this are called Treasury securities, and are often called “marketable” securities.  These securities can be purchased or sold in secondary markets after being purchased from the Treasury.  Savings bonds cannot be transferred in this manner.  Thus, making the Savings Bond a very good choice for kids as it will continue to grow in interest for 30 years.  The savings bond can be cashed in at any point, but may result in small financial penalties.  At 20 years, the bond is guaranteed to double in face value.  Treasurydirect.gov has all the purchasing information.

Another great gift is to make a contribution to a child’s 529 Savings Plan.  The 529 savings plan and 529 pre-paid tuition plans operate very much like a 401k or IRA.  There are substantial tax breaks available for 529 plans.  This would be a great alternative to paying capital gains tax on a great year in the stock market.

Other financial gifts to consider for kids are stocks, IRA contributions, cash, and most importantly financial advice.  Stocks that you already own can be transferred to another person’s name.  Children often want something to care for, like a puppy or a kitten.  Teach them about taking care of their finances with having them monitor their own stocks.  Intentional mentorship on a child can have a wildly positive effect on their future.  Remember, the wolf on Wall Street was once a young pup.

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