{"id":5108,"date":"2015-12-20T06:59:44","date_gmt":"2015-12-20T10:59:44","guid":{"rendered":"https:\/\/kerryhannon.com\/?p=5108"},"modified":"2015-12-20T06:59:44","modified_gmt":"2015-12-20T10:59:44","slug":"5-money-smart-holiday-gift-ideas-for-your-kids","status":"publish","type":"post","link":"https:\/\/kerryhannon.com\/?p=5108","title":{"rendered":"5 Money-Smart Holiday Gift Ideas For Your Kids"},"content":{"rendered":"

\"next-ave\"<\/a>I\u2019m shopping for holiday gifts this week, as I suspect many of you are. Some of my favorite names on my list are my nieces and nephews, age 17 to 28.<\/p>\n

Since I frequently speak to audiences and write about the importance of financial security, I\u2019ve realized that one of the best holiday gifts I can give them \u2014 and you can give your grown child or niece or nephew \u2014 is the gift of investing knowledge. It\u2019s a gift with a far-reaching impact (and if you don\u2019t get a huge \u201cthank you\u201d for it this year, you will one day.)<\/p>\n

Here are Santa Kerry\u2019s five money-smart suggestions to consider:<\/p>\n

1. Cash alternatives<\/strong> No one ever complains about receiving cash. This year, earmark it toward a savings plan. Three options I discussed in this Next Avenue column<\/a>: buying U.S. savings bonds, funding a 529 college-plan account and putting money into a child\u2019s Roth IRA.<\/p>\n

MORE:\u00a0<\/span>3 Wise Ways to Give Kids Money<\/span><\/a><\/p>\n

Although most advisers prefer clients of means, some are happy to take on younger customers (who may turn into clients of substantial means).<\/p>\n

2. A good book (or online booklets) on money basics<\/strong> Two solid books written for young adults are Generation Earn: The Young Professional\u2019s Guide to Spending, Investing and Giving Back<\/em><\/a> by U.S. News & World Report senior editor Kimberly Palmer and the bestselling Get a Financial Life: Personal Finance In Your 20s and 30s<\/em><\/a> by Beth Kobliner, a noted personal finance commentator and former colleague of mine at Money magazine.<\/p>\n

An excellent new book for people of all ages (buy two \u2013 one for your gift recipient, one for you) is the Jonathan Clements Money Guide 2016<\/em><\/a>.\u00a0 And you can\u2019t go wrong with Eric Tyson\u2019s bible, Investing for Dummies<\/a>.<\/em><\/p>\n

Online, visit the Investor Protection Institute\u2019s Iinvest.org site<\/a>, and print out free booklets<\/a> that explain stocks, bonds and mutual funds. Bundle them together in a nice package, adorned with a festive bow.<\/p>\n

3. A subscription <\/strong>A digital or, old-school hard copy, subscription to a financial publication such as The Wall Street Journal, Money or Kiplinger\u2019s Personal Finance is a smart way for a young adult to learn about investing, saving and spending and keep up with the latest financial news, too.<\/p>\n

4. Personal financial planning help<\/strong> I would have prized getting this in my 20s, so I could have learned how to live within my means, avoid painful credit card debt<\/a>\u00a0and dive into my first 401(k). Look for a fee-only planner with the Certified Financial Planner designation.<\/p>\n

Although most financial advisers prefer clients of substantial means, some charge nominal hourly fees and are happy to take on younger customers (who, ideally, will turn into clients of substantial means). These include XY Planning Network<\/a>, which specializes in assisting GenX\u2019ers and GenY\u2019ers, and Garrett Planning Network<\/a>, whose advisers have no income or investment account minimums.<\/p>\n

5. An actual investment<\/strong> Unlike fashion-forward duds, shares of an index fund or\u00a0ETF<\/a> (exchange-traded fund) won\u2019t wear out and, if properly selected, can grow in value. When it comes to learning about investing, the very best way is actuallydoing it<\/em>. Your child will have some skin in the game, making him or her very interested in paying attention to the details for future prosperity.<\/p>\n

I\u2019m not keen on buying a child shares of a single stock \u2014 no diversification \u2014 and neither is Kobliner. \u201cI\u2019ve never been a fan of having kids invest in individual stocks,\u201d she says. \u201cIf the stock your kid owns doesn\u2019t do well, he or she could come away from the experience thinking that investing is a bad idea. On the flip side, if that stock performs really well, your kid could wind up thinking he or she is a stock-picking genius. Both of these takeaways are detrimental, since kids will definitely need to invest later in life, and should choose diverse investments when they do.\u201d<\/p>\n

Kobliner\u2019s solution? \u201cHelp your kid purchase an individual ETF\u201d that essentially owns a basket of stocks. One of her favorites, as well as mine, is the Vanguard Total Stock Market ETF, a mix of small, mid-size and small company stocks. Current price: just over $100 a share.<\/p>\n

A technicality if you will buy fund or ETF shares for someone under 18 other than your own kid: his or her parent or guardian must first set up a custodial account. Several brokerages offer custodial accounts with low minimums, waive set-up fees and typically have low or no commissions for buying and selling shares. The Schwab One Custodial Account<\/a>, for instance, requires only $100 minimum to open an account and has no initial fees.<\/p>\n

A new service, called SparkGift<\/a>, lets you choose among index funds (stocks, too, if you insist) and spend $20 to $2,000 to give one as a gift, for a fee of $2.95 plus 3 percent of the gift value; you pay by credit or debit card. From now through the end of 2015, SparkGift\u2019s charging only the $2.95 for all gifts up to $100.<\/p>\n

You provide the name and email address of the gift recipient (the parent\u2019s name and email address if the child is under 18) and SparkGift sends the email when you tell it to.<\/p>\n

\u201cThe best way to teach kids about investing is to get them investing,\u201d says Peggy Mangot, SparkGift\u2019s CEO. \u201cIf you give kids the experience of investing in a fun, hands-on way with their own money, they\u2019ll remember and apply those lessons for a lifetime.\u201d<\/p>\n

The fun part of giving investments as gifts is having the chance to talk with your son, daughter, niece or nephew about them and track the fund or ETF together over time. That\u2019ll give you both a chance to talk about the nuts and bolts of investing in a way that takes the mystery out of it and gives you something tobond <\/em>over. Ho ho ho, ha ha ha, fa la la.<\/p>\n

By Kerry Hannon<\/a><\/span><\/p>\n

\n

Money & Work Expert<\/span><\/p>\n

\u00a9 Twin Cities Public Television – 2015. All rights reserved.<\/a><\/p>\n

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