spending

Financial Gifts for Kids

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

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.

You or her parents will need to sign extra forms to open a custodial Roth IRA if she’s a minor. Fidelity and TD Ameritrade offer custodial Roth IRAs with no minimum and no maintenance fees. Charles Schwab 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 for each state’s rules). Many 529s participate in the Ugift 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 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.

Most Popular

Retirement Income Shouldn’t Depend on the Market; It Should Depend on Math
retirement planning

Retirement Income Shouldn’t Depend on the Market; It Should Depend on Math

The math isn’t as tough as you might think. It all starts with dividing your assets into three different buckets.
May 23, 2022
Your Guide to Roth Conversions
Special Report
Tax Breaks

Your Guide to Roth Conversions

A Kiplinger Special Report
February 25, 2021
Why Are Gas Prices Still Going Up?
spending

Why Are Gas Prices Still Going Up?

The cost of a gallon of gas is heading back toward its March highs. What’s driving the resurgence, and will gas prices go down anytime soon?
May 23, 2022

Recommended

Why Are Gas Prices Still Going Up?
spending

Why Are Gas Prices Still Going Up?

The cost of a gallon of gas is heading back toward its March highs. What’s driving the resurgence, and will gas prices go down anytime soon?
May 23, 2022
Things You’ll Regret Keeping in a Safe Deposit Box
savings

Things You’ll Regret Keeping in a Safe Deposit Box

Locking up certain important documents and valuables in a bank vault could turn into a headache for you or your heirs.
May 18, 2022
The Berkshire Hathaway Portfolio: All 47 Warren Buffett Stocks Ranked
stocks

The Berkshire Hathaway Portfolio: All 47 Warren Buffett Stocks Ranked

The Berkshire Hathaway portfolio is a diverse set of blue chips, and increasingly, lesser-known growth bets. Here's a look at every stock picked by Wa…
May 17, 2022
8 Facts You Must Know About Bear Markets
investing

8 Facts You Must Know About Bear Markets

Bear markets can be terrifying, but they're normal, inevitable and – most importantly – don't last forever.
May 13, 2022