Tuesday, December 01, 2009

Holiday Gift Ideas: Money-Themed Presents

This year, instead of giving gifts that your friends and family will only use a short time, David McPherson of ABC News.com is encouraging readers to give money-themed presents. These types of gifts can both encourage recipients to make smarter decisions about money, and some might even help lower their tax liabilities. Check out a few of their ideas below, of find the full article at ABC News.com.

1. Roth IRA: If you have a child now making money on their own, then consider setting up a Roth IRA in their name and funding it with an initial contribution. Then let decades of tax-free compounding go to work. The Roth IRA allows for tax-free withdrawals in retirement, and its advantages are greatest for the young.

2. Books: After a Roth IRA, the money-related gift that offers the highest potential rate of return is a book that teaches good personal finance habits early in life. The book that triggered my interest in personal finance shortly after I got married was "Making the Most of Your Money" by Newsweek columnist Jane Bryant Quinn.

3. Subscriptions: Worried that a 700-page tome on investing or personal finance might go over as big as a tacky Santa sweater? Then consider giving a one-year subscription to a personal finance magazine or maybe the Wall Street Journal, which offers a mix of day-to-day market coverage along with in-depth stories and columns on individual investing and other personal finance topics.

4. Financial planning gift certificate: Is somebody important to you in need of individualized financial help? Then consider paying for a few hours of time with a fee-only financial planner willing to work with clients on an hourly basis. Many of these planners offer gift certificates on their Web sites, and if you don't see one, ask.

5. 529 plan: Thinking about buying a savings bond for Junior's college fund? I say forget it, and instead help fund a 529 college savings plan. U.S. savings bonds are more trouble than they're worth with a long list of peculiar rules.

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