In a season of splurging and immediate gratification, many families are looking for gifts that will provide their children more lasting value.
Parents, aunts and uncles might be looking for gifts that will help kids grow up. And for something that doesn’t make big noises, break easily or need batteries.
For those shoppers, a financial gift makes a rewarding addition to all the toys, clothes and electronic gadgetry.
There are plenty of choices.
Indeed, the more challenging part might be figuring out out how to get it done and how to make the gift more appreciated by young people.
Try to stick with gifts you understand. Particularly with younger children, it’s up to parents to teach why shares of Disney stock, for example, can be as exciting as DVDs of Disney movies.
It may help to link the gift to real toys. Package the stock certificate, or some symbol of it, along with the DVD.
Put aside a few minutes after the unwrapping frenzy to present a financial gift. Pep talks can’t compete with toys.
Make it an ongoing project. Think about upping a child’s allowance, with the understanding that at least part of the increase goes into an investment pot. You can sweeten the pot with a matching contribution. An additional benefit: People, no matter how young or old they are, pay more attention when their own money is involved.
What can you give?
– Stocks. It’s a good idea to check the products your kids are interested in, then look at the companies.
Brokers and mutual funds usually can explain how to set up a custodial account.
– Mutual fund shares. This may be a better choice for most families, unless they are comfortable picking individual stocks.
There are a few funds designed particularly for children, but the cost of investing in them is high. Low-cost providers include Vanguard, TIAA-CREF and T. Rowe Price.
Savings bonds. These are the old reliables, but note that they are paying low interest rates these days. Series EE bonds are paying 2.61 percent, and Series I bonds are paying 2.19 percent.
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Edited by Lara Weber ([email protected]) and alBerto Trevino ([email protected])
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