5 Best Gifts for Investors: Bring Joy to the Money Nerds in Your Life
Financial gifts may not be the first thing you think of when deciding what to buy someone for the holidays.
For one thing, they're a little hard to wrap. But they might be more useful than an ill-fitting sweater for many people on your list.
Financial products can help kick off someone’s investing journey, help set up a bright future for a child, or even start a fun shared hobby between friends.
Let's take a look at some of the best savings- and investment-related products that could make great gift ideas this year.
There are many financial gift options out there. Five popular ones could include savings bonds, stocks, Roth IRA contributions, a session with a financial planner, and crypto. Here's why each made our top gifts list this holiday season.
1. Savings Bonds
Unlike other Treasury securities, savings bonds are available for purchase as gifts. Savings bonds are “non-marketable” and are not tradable on a secondary market. The way they work is that the money you pay for a savings bond represents a loan to the U.S. government.
In exchange for the loan, the savings bond continues to earn interest for up to 30 years. The bond is redeemable for its face value (plus any interest earned) at any time after one year. However, if the bond is redeemed before five years, it loses the last three months of interest.
Savings bonds are available as Series I bonds or Series EE bonds. These both accrue interest monthly and compound interest semi-annually. Series EE bonds earn a fixed rate of interest, while the interest rate of Series I bonds is based on both a fixed rate of return and a variable semiannual rate indexed for inflation.
Right now, Series I bonds are paying a whopping 6.89% through April 2023. And Series EE bonds are guaranteed to double in value from their issue price within 20 years of their issue date.
You can purchase a digital savings bond as a gift through the TreasuryDirect website, which the U.S. Department of the Treasury operates. The recipient will also need to have a TreasuryDirect account.
Minors can own savings bonds, which makes them a good option for gifting to a child.
Learn more >>>Why I Like US I Savings Bonds
You can gift stocks by transferring stocks that you already own or purchasing individual shares through an online brokerage that supports stock gift-giving.
If you want to use a broker to gift stocks, the recipient will need an account where they can receive the stocks. Some brokers allow you to fill out an online form with the sender and the recipient’s information. It may even be possible to set up a recurring transfer to gift stock regularly.
There are several ways to buy stock as a gift.
- If you want to give stock to your children, you could set up a custodial account. The child recipient will then gain full control of the account when they reach an age of majority. Purchasing stock in a child’s name can also teach the child about investing as they watch the stock’s value fluctuate.
- You can give a share as a virtual gift to friends or family. Some websites allow you to purchase a share and make it redeemable for friends or family. This can be an option if you don’t want to purchase and transfer the stock. The recipient can sell the stock and keep the cash or take the proceeds and buy shares of a different stock.
Note: When you transfer stock or give a share, the recipient will become responsible for capital gains when they sell and will be responsible for the taxes on these capital gains.
Physical Stock Certificates
If you have a physical stock certificate that you want to give, you must transfer the stock using the help of a guarantor. The guarantor is someone authorized for these transactions at a bank or a brokerage, similar to a notary. You must endorse the stock certificate in front of the guarantor and fill out a transfer form. However, this is far less common nowadays, as you’ll generally own stock through online accounts.
Read more >>> How to Gift Stocks
3. Roth IRA Contribution
If you're getting a financial gift for a minor under age 18 who is earning income, a Roth IRA could be a useful option. Roth IRAs offer tax-deferred growth. Since the minor is likely in a low tax rate, paying tax rates now is probably lower than what they will be when taking distributions in the future.
For 2023, your total contributions each year to your Roth IRAs and traditional IRAs can’t be more than $6,500 (or $7,500 if you’re 50 or older). Note that you can't contribute more to a child's Roth IRA than they earn per year in income.
But if you’re a parent who owns a small business, employing your child in the business is a great way to give them eligibility to make Roth contributions, which you can make on their behalf.
Related >>> How To Talk to Your Teens About Investing
4. A Session With a Financial Planner
Working with a financial planner can be worth more than the value of a monetary gift that you could give. Having a good financial understanding can help for a lifetime. Many financial planners offer virtual planning services, including financial check-ups, goal setting and tracking, and advice during major life transitions. People who may benefit from a session with a financial planner include couples who are expecting a baby, getting married, or planning a home purchase.
When giving a financial planning session, look for a fee-only fiduciary who charges a flat rate instead of someone who gets paid on commission. This will be more straightforward for the gift-giving process. You could also look at companies that offer financial planning memberships. These companies often have different packages with a range of services offered.
5. Crypto (Make it Rain Shi*coins)
Crypto is a high-risk, high-reward investment, so keep that in mind. But if your gift recipient is already a seasoned NFT-collecting ETH-head or HODLing dogecoins for the lolz, or just seriously into crypto, this might be a fun way to share in their hobby.
Crypto is a relatively new financial gift option. There are several coin options, like Bitcoin and Ethereum, and you can even buy digital assets through platforms like PayPal and Venmo and trade them through apps like Robinhood.
Cryptocurrencies are classified as property for tax purposes and are taxed like other common assets like stocks. If you made a profit selling crypto, you would need to pay taxes. However, you don’t have to pay taxes on giving crypto unless the amount exceeds the $16,000 gift tax allowance.
Thinking about it? >>> How to Gift Crypto This Holiday Season
The Takeaway: Give the Gifts That Keep On Giving
Coming up with a good holiday gift can be daunting. Financial gifts can be enjoyed by virtually anyone — and you won’t need to worry about buying the wrong size. Just remember that as of 2022, any gift over $16,000 per year per individual may be subject to a federal gift tax. For 2023, this amount rises to $17,000 per year per individual. Beyond that, happy shopping!
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