Many people are against giving toys as gifts to children or they may just want a change of ideas for gift giving. Investment gifts are a great way to start children with a strong financial independence. It teaches them how important it is to not take savings and investments for granted. Here are 4 investment gift ideas for your children.
529 College Savings Plan
School is very expensive and many families find themselves taking loans to help pay for the cost of college. A 529 college plan is an excellent gift for any child. It’s the start of ensuring they can get the education they want to have. 529 plans grow tax free. They can use the money for tuition, books, room and board, and other educational expenses. If the child decides not to go on to college they can still withdraw the money but will have tax consequences and a penalty to deal with.
Life Insurance Policy
A quote life insurance policy may not seem like an investment gift for a child but in fact it is. Starting a plan early on can gain significant cash value by the time your child reaches adulthood. They can either continue the life insurance policy or cash it out to do whatever they see fit. It’s a great way to start a savings account, invest the money, or help with their college expenses. The earlier you get the plan, the cheaper the policy will be.
Certificate of Deposit
A Certificate of Deposit or CD is a safe investment gift for children. They will earn interest on this account. The CD can be held for small periods of time, like 3 or 6 months, or you can select longer terms like one year to five year plan. Generally, the longer the term you select, the higher the AYR you will yield.
A Bank Savings Account
An easy investment gift for your children would be a standard savings account. You can start an account for your children at a bank or credit union. The best thing about these accounts is that anyone can contribute to them at any time. A savings account is a great way to teach children financial responsibility early on in life. Some banks offer incentives for children to go in and make deposits themselves and keep accurate information in their bank statement books. Most children are very excited about these account options.