With the number of holidays, birthdays, graduations and weddings to shop for, many people find themselves drawing a blank when it comes to finding the perfect gift. Nobody wants to spend hard-earned cash buying an unwanted present or something that will get buried in the back of a closet. One of the more everlasting gifts that family and friends can bestow is one that will teach young people about personal finances and encourage them to save. Want to give a gift that keeps on giving? Try one of these distinctive gifts for young investors.
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Gift givers can purchase a single share of a company through websites such as http://www.oneshare.com/ and http://www.giveashare.com/. Rules established by the Securities and Exchange Commission (SEC) prohibit these companies from selling certificates worth more than one share of stock; you can, however, buy multiple, one-share certificates. In addition, to comply with SEC regulations, these companies must provide fair prices on stock shares and market their products as gifts - not investments.
Often, the shares represent kid-friendly stocks - companies that kids have heard of and that they like, such as Disney (NYSE:DIS). This makes the gift of stock appealing to young people. Of course, for the high school or college graduate on your list, you can purchase a share of Starbucks (Nasdaq:SBUX).
Another option for stock gifts is to purchase a small amount of shares of a particular stock in order to start a DRIP plan. A DRIP is a dividend reinvestment plan, run by a public corporation, which allows investors to reinvest dividends and/or purchase additional shares of the stock directly from the company. (Learn more about DRIPs in The Perks of Dividend Reinvestment Plans.)
Financial Planner Session
A practical gift that can have enduring results is to purchase a session or two with a financial planner. This gift is especially helpful to high school and college-aged people who may not have developed much financial literacy. A financial planner can help establish goals - both for the short and long term - that young people can use as a guide. A close look at your own expenses, income and goals can be a wake-up call to start taking a more proactive approach to your finances. A session with a financial planner can make this happen, while encouraging young people to become more financially aware and independent.
The National Association of Personal Financial Advisors (NAPFA; http://www.napfa.org/) has an online tool to locate planners in a particular city or area. The search results list each company's details, including telephone numbers and website addresses.
Personal Finance Class or Seminar
Giving homework as a gift might seem a bit unusual, but there are many online personal finance classes available that can provide young people with a basic understanding of a variety of financial topics.
Southwestern Community College's ed2go program (www.ed2go.com/scc), for example, offers online classes in areas such as "Debt Elimination Techniques That Work", "Keys to Successful Money Management" and "Personal Finance". Online classes usually have a choice of session start dates from which to choose, and are an affordable gift. Since these types of classes are typically non-credit, gift recipients won't be burdened with the stress to get an A, and the flexibility of the online venue means the classes can fit into just about anyone's schedule.
Although it is never too early to start saving for retirement, many young people simply ignore the future and focus on the present. Making contributions to a Roth IRA (individual retirement account) can help secure a young person's financial future. Individuals (such as a parent or relative) can establish a Roth IRA in a child's name, and make contributions based on the child's after-tax income or the annual contribution limit.
One perk associated with a Roth IRA is that the earnings can usually be withdrawn tax-free (if the account is held long enough). Additionally, since the Roth IRA is a qualified retirement plan, it is not counted when applying for college financial aid, as long as no distributions are taken while the student is in school. (Learn more in Roth IRA: Back To Basics.)
It All Adds Up
A gift that adds to a young person's financial understanding and stability is one that is both practical and lasting, and one that feels good to give. Helping steer young investors in the right direction, both with small investments, such as individual stock shares, and by arming them with the knowledge to make sound financial choices, can be an invaluable, and much appreciated, gift.
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