If you want to give a high-school or college graduate a gift with a big financial impact, go beyond writing a check. Giving the gift of investing—with individual stocks, bonds or investment accounts and even some financial planning—will help a young adult get started on the long road to financial security.
If you have a newly-minted graduate in your family, consider giving him or her a gift that will keep on giving.
With the generous $5.12 million gift tax exemption, in addition to the $13,000 annual gift exclusion, 2012 is the year of gifting. Giving a substantial gift in life, rather than a bequest at death, not only means seeing the fruits of your decision, but also perhaps being there to guide it to the best use.
A recent article in The Wall Street Journal titled “Give a Graduate the Gift of Becoming an Investor,” discussed the gift of stock to a recent graduate.
You might say there are gifts that provide the means and then there are gifts that provide the tools, or the know-how. If you are there to assist and teach, then a gift of stock may very well be a gift that accomplishes both objectives. The stock itself has value, especially if it has been your own, and it can lead to financial security. Furthermore, teaching the financial secrets behind choosing and maintaining your portfolio is an even greater tool and life lesson.
Choosing the stock to give is another matter. You can work together to buy something and thereby make a direct gift, or you also could give a stock you’ve owned for some time and hope to pass on.
This second route is altogether more rewarding since it kills two birds with one stone. In addition, this move may even help keep the tax-man at bay if you’ve determined the basis and are working with a “temporarily depreciated” stock (i.e., the kind that abound these days).
For more ideas on the kinds of financial assets to give and the lessons to teach, I highly recommend the original article as a prelude to a fuller investigation.
Reference: The Wall Street Journal (June 2, 2012) “Give a Graduate the Gift of Becoming an Investor”