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.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
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.
-
-
The 6 Safest Vanguard Funds to Own in a Bear Market
recession Batten the hatches for continued market tumult without eating high fees with these six Vanguard ETFs and mutual funds.
-
In Retirement Planning, What’s Your Retirement Personality?
There are many ways to think about retirement planning, and your personality can influence yours. If your personality and plan match, you have a greater chance of retirement success.
-
Credit Report Error? They All Matter
credit & debt Don't dismiss a minor error. It could be the sign of something more serious.
-
Insurance for a Learning Driver
insurance Adding a teen driver to your plan will raise premiums, but there are things you can do to help reduce them.
-
529 Plans Aren’t Just for Kids
529 Plans You don’t have to be college-age to use the money tax-free, but there are stipulations.
-
When to Transfer Ownership of a Custodial Account
savings Before your child turns 18, you should check with your broker about the account's age of majority and termination.
-
Borrowers Get More Time to Repay 401(k) Loans
retirement If you leave your job while you have an outstanding 401(k) loan, Uncle Sam now gives you extra time to repay it -- thanks to the new tax law.
-
When It Pays to Buy Travel Insurance
Travel Investing in travel insurance can help recover some costs when your vacation gets ruined by a natural disaster, medical emergency or other catastrophe.
-
It’s Not Too Late to Boost Retirement Savings for 2018
retirement Some retirement accounts will accept contributions for 2018 up until the April tax deadline.
-
What Travel Insurance Covers When Planes Are Grounded
Travel Your travel insurance might help with some costs if your trip was delayed because of the recent grounding of Boeing 737 Max planes.
