It is truly better to give than to receive. But sometimes the best gifts aren’t the traditional ones that can be wrapped or worn but ones that can change your financial future for the better. Though cash and gift cards are always appreciated, here are a few ways to think outside the box.
Gift cards are one of the most popular gifts for the holidays. But instead of giving your friends and family money to shop at their favorite store, you can give them ownership of that store through owning stock.
There are several ways to do this. You can use a service like Stockpile, GiveAshare or Unique Stock Gift. If you already own a stock and you want to transfer the ownership, you can do it through your brokerage firm where you purchased the stock. Below I will explain the benefits and drawbacks of each method.
Of the three services, Stockpile is the most affordable option and offers the most features (read our full review of Stockpile).
Stockpile offers more than 1,000 different stocks and ETFs (exchange traded funds) to choose from. In addition, you’re allowed to buy fractional shares of any company that you choose. Instead of paying full price for the stock, you have the option of buying a portion of it. For example, as of this date, Google, also known as Alphabet, Inc. (GOOG), is trading around $800 per share. If that price is above your budget, you can choose to buy just 10% of a single share or $80 worth. You also have the option of giving a gift card, allowing the recipient to buy shares in a company of their choosing. One they’ve bought the stock, they can track their performance with the Stockpile app.
GiveAshare and Unique Stock Gift are similar services that allow you to buy a physical stock certificate and frame it. These are excellent gifts for your home or office. GiveAshare offers more than 100 of the most well known stocks such as Nike, Disney, Facebook, and Microsoft. Purchasing a stock through them legally registers you as a shareholder, which means you would be entitled to receive dividends, annual reports, and other stockholder benefits just as if you bought the stock online. The price will depend primarily on the company you choose and what framing options you select. Unique Stock Gift is very similar to GiveAshare but offers more than 190 stock choices.
If you already own shares of a company and you’re looking to transfer ownership, you have to contact your brokerage firm to ask for a transfer form. If you’re transferring stock to a minor, they will have to open up a custodial account to receive the stock. A custodial account is an investing account a parent can set up for their child. All investing decisions must be made for the benefit of the child, and when he or she reaches a certain age (usually 18 or 21, depending on the state), they take control over the account. Any cash or investments that go into the custodial account may not be transferred out of the account and back to the parent.
Pay a Student Loan Bill
It may not sound like much of a gift but student loans have become a huge burden for millions of people. Making one student loan payment for someone can really make a difference, especially for the 40% of Americans who are behind on their payments or can’t pay at all.
For starters, you could take the most obvious route and write a check for the amount of their monthly bill. For some, this may seem too impersonal, nor is it guaranteed to go to the loan. So far, there is one service offered by Gift of College that allows you help pay off student loans online or with a gift card. Gift of College uses the concept of a gift registry but allows you to contribute to paying off student loans or saving for college with a 529 plan. More on the 529 plan option below.
Start a 529 College Savings Plan
Want to help someone get a head start on the cost of college? A 529 plan allows you to save and invest toward the cost of education. To start a 529 plan, you could simply open the account at your favorite brokerage firm or with your financial adviser. Unlike custodial accounts, a 529 plan grows tax free and can be used only for college expenses. Additionally, anyone can help contribute to the plan, which can help multiply your initial efforts. Instead of making a one-time gift, you and other family members could contribute to the plan every year for birthdays and the holidays. Gift of College allows you to contribute to a 529 plan in the same way you would buy a gift card, making the process much easier by allowing you to contribute online and at select Toys R Us stores. To research college savings plan options, a great place to start is the College Savings Plans Network.
Help Save for a Goal
If you’re looking to teach your child how to set financial goals and save, iSow is the perfect platform. Think of it like GoFundMe for gift giving. The site allows kids ages 13 and older to save for one of three options: Savings, Causes, or Wishes. If your child is under age 13, you will have to sign up for them. Once you goal is set, you receive a customized link to share on social media, or you can add the link for special events like birthdays.
The Old-Fashioned Piggy Bank
A piggy bank might seem like the least exciting gift idea on the list; however, teaching your children how to save could be the most powerful gift of all. Go a step further and open a savings account under a loved one’s name. The entire family can contribute to the savings account instead of giving physical presents. Good financial habits start at home. Research has found that adults who learned financial literacy as children received better mortgage loan performance including a lower rate of foreclosure. With the right financial education, your kids can make the best decisions with any financial gift.