It’s that time of year again… making the holiday gift list and checking it twice. If you’re wondering if your family member needs one more ….(you fill in the blank), here are some ideas to make this year’s gift a long lasting benefit for those you love.
- Gift to their 529 Plan. If your loved ones have college savings accounts, called 529 plans, consider contributing as your gift. Many of us have fond memories of attending that little one’s first birthday party or first Christmas. While all those clothing items and toys are adorable, the child will certainly benefit more with a gift that keeps growing. Besides, your little one will have no memory that you gave that cute toy or a more responsible gift.
- Give those teenagers and young adults on your list a head start by contributing to a Roth IRA on their behalf. The kids can use them to build tax-free income for retirement or could even tap the contributions for expenses such as buying their first home. The recipient must have earned income to contribute, and the amount cannot be more than they earned during the year (up to a max of $6,000 in 2022). Pick a low-cost growth mutual fund like a target retirement date fund for instant diversification and low maintenance.
- Teach the often hard-learned lesson of delayed gratification by giving a chambered piggy bank labeled “spend, save, invest, and give”. You teach that loved one that getting money today isn’t just about spending it today. You can even seed the account with cash and/or offer to match their contributions for a certain period.
Though they may not appreciate these strategies today, have comfort that one day they will really be thankful for your generosity.
