Financial Gifts for Kids

Invest in a child’s future with gifts of stock or contributions to a Roth IRA or college savings.

Father contributing to his son's savings by adding coins to his piggybank - home fincances
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Question: I would like to give my niece a meaningful gift this holiday, not just a check or a sweater. What are the best financial-related gifts? -- J.T., Brick Township, N.J.

Answer: Several gifts can help your niece get more of a head start with her finances than if you just sent her a check.

If she earned any income from a job, you can give her money to contribute to a Roth IRA -- up to the amount she earned for the year, with a $5,500 maximum in 2018. She can withdraw the earnings tax-free in retirement and can tap the contributions anytime without taxes or penalties.

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You or her parents will need to sign extra forms to open a custodial Roth IRA if she’s a minor. Fidelity (opens in new tab) and TD Ameritrade (opens in new tab) offer custodial Roth IRAs with no minimum and no maintenance fees. Charles Schwab (opens in new tab) has a $100 minimum and no maintenance fees.

You can contribute to a 529 plan, which she can use tax-free for college. Many states offer a state income-tax deduction for the gift (but not New Jersey; see www.savingforcollege.com (opens in new tab) for each state’s rules). Many 529s participate in the Ugift (opens in new tab) program (www.ugift529.com), which makes it easy for family and friends to contribute online. Other 529 plans, such as those offered by Fidelity and T. Rowe Price, have their own gifting programs.

Or you could give her some shares of stock. Online brokerage firm Stockpile (opens in new tab) offers gift cards on its site or at retailers such as Target and Staples. You can give from $1 to $2,000, which your niece can invest in her choice of more than 1,000 stocks and track through a kid-friendly app.

Kimberly Lankford
Contributing Editor, Kiplinger's Personal Finance

As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.