4 Wealth Filled Holiday Gifts For Kids

4 Wealth Filled Holiday Gifts For Kids

Alexa! Play Silent Night by the Temptations.

It is that magical time of year that we all create lists of gifts to give to those we are grateful for. Some gifts hold emotional value and others not so much. Kids have lists that seems to prove to parents that Junior needs to get a job, but the reaction on Christmas Day makes it worth it.

Wealth is something that many can say but few can secure. While that might seem tough to grasp, it is the hard facts. Part of the culture has the spending power to buy toys and tings, but don’t have the same level of power for building wealth. Unfortunate facts.

But this year parents, grandparents and play aunts and uncles can shift that dynamic for feature generations. How? Glad you asked. Toys are great, but tools for wealth holds lasting power than batteries in that Power Wheel.

While these different financial vehicles are great gifts, you can give these money markers all year long!

High-Yield, Long Build - Savings Accounts:

I remember my parents gave me savings account when I was a whittle. The flip side to that gift is that it didn’t keep on giving. Sure, depositing into the account generated funds - it didn’t pay to play with that type of account. Typical savings accounts gives you pennies on the year (literally) for them holding your savings. High-Yield Savings accounts give you nearly triple than regular degular savings accounts. A few of my favorites are Ally, Marcus by Goldman Sachs, Capital One and American Express! To check the rates, click here!

Another option that you can look into would be money market accounts + CDs.

What you would need? The recipient’s legal name, Social Security number and address.

Custodial Accounts, IRAs, Stocks - Oh My!

If you know me, you know I advocate for parents gathering stocks for the kids! Custodial Accounts are just another way for them to invest and the account is in their name :) . You can even transfer stock that you currently own into the child’s custodial account (ShareBuilder or OneShare).

Custodial IRA Contributions – No matter if your child has a job (and you make them put money into said account) or you fund his or her annual contribution, up to the allowable amount. This is still a great gift that generates long-term wealth. You can even invest with these accounts.

Tea: Let me take it a level deeper with this ‘gift’. I love to say ‘consume what you consume’ or ‘buy what you consume’ - this goes with those brands of toys that you are buying. Just as for Madden or Barbie, there are brands that offer stock publicly. Look at your children’s list and see what you can buy or buy buy. Wouldn’t it be amazing if they had the toy and the company for Christmas. Don’t worry if the company is out a price range - look to platform that allows you to buy pieces until you hold the whole pie.

What you would need? The recipient’s legal name, Social Security number and address.

529’s: More Than Tuition

We all know that college is can be a pain but hold purpose. Educational costs can be skyrocketing. Some students receive grants and scholarships - but some don’t. With 529s parents and village members can start curving the pain that could potential come when kids head off to college. These accounts are tax-advantaged plans that allow families to save for future college expenses. And even if they don’t go to college, they could use these funds to funnel more funds. There are 2 types:

529 Savings Plans – These plans work similarly to other investment plans such as 401Ks and IRAs in that your contributions are invested in mutual funds or other investment products. These accounts are state-sponsored; but the owner of the account (i.e. the parents) deals directly with the asset management firm, rather than with the state. The beneficiary (your child or grandchild) is the person for whom the account is set up and who will use the money for college.

529 Prepaid Tuition Plans – Prepaid tuition plans, also called guaranteed savings plans, are administered by states and higher education institutions. This accounts allow parents to lock in today's tuition rate and the program pays future college tuition at any of the state's eligible institutions. If the student goes to an out-of-state or private college or university, an equal amount of money is distributed.

*Please do research on which works for your long term goals. Also, learn which carrier allows you to transfer into another account in case your child doesn’t need the funds due to scholarship or taking an alternate career path.

What you would need? The recipient’s legal name, Social Security number and address.

Save is Bond - Savings Bonds:

While these don’t have the strongest return due to the current status of our economy, they are still great wealth builders. They can grow steadily by earning interest. Treasury securities are types of debt instruments that include Treasury bills, notes, bonds, Treasury inflation-protected securities (TIPS) and savings bonds. Most Treasury securities are called “marketable” securities because they can be bought and sold in secondary markets after they are purchased from the Treasury. Savings bonds differ from other Treasury securities in a few ways:

  • Savings bonds are “non-marketable” and therefore cannot be traded on a secondary market.

  • Savings bonds can be owned by kids.

  • Savings bonds are available for purchase as gifts.

Savings bonds can earn interest for up to 30 years. Any time after 12 months, the savings bond can be redeemed for its face value, plus any interest it has earned; however, if the bond is redeemed before it is five years old, you will forfeit the last three months’ interest. This isn’t something that you can pitch and flip (like trading). This is a method that you set and forget.

How do you purchase them digitally? I’m glad you ask:

Go to  www.treasurydirect.gov.

  1. Log into your TreasuryDirect account (or open one in your name).

  2. Purchase the type of savings bond you wish (Series EE or Series I), in the desired amount ($25 to $10,000).

  3. Deliver the savings bond gift to the recipient’s TreasuryDirect account.

  4. Print out a gift certificate to give to the recipient.

What you would need? The recipient’s legal name, Social Security number, and TreasuryDirect account number. In order for an under-18 child to receive a savings bond as a gift, the child’s parent or legal guardian must set up a Minor Linked Account within his or her own TreasuryDirect account. But if the child’s parent/guardian does not set up an account (for whatever reason), you can still buy the bond, hold it in your own account’s “Gift Box” and transfer it at a later date.

More Insight:

For 2018, you could give up to $15,000 per year ($28,000 if you and your spouse gave together) to as many people as you want, without any tax consequences to you. Because tax laws are complicated, work with qualified tax professionals to make sure that your returned doesn’t get audited.

Toys break and need batteries. Building wealth doesn’t take a lot of money and allows the next generation to go broke! I am not against giving during the holidays, but I am about balance that will grow over times. Investing into the next generation is something that our culture should take heed in doing. If you would love to chat with me about your generational wealth objectives, click here.

Let’s get in formation with using the holidays as a foundation of financial growth for the next generation!

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