Some people try to give their loved ones the financial security this season of holiday, instead of a toy or a gadget. Financial institutions and retailers are making it easy to give gifts with lasting value because it’s not possible to hand out cash.
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Among them is a company from US that sells gift cards which can be redeemed for stock, selling its product out to 14,000 stores this season after watching the success of other retailers.
While financial gifts can be tricky, the givers are required to be aware of social implications.
An assistant professor of Personal Financial Planning, labels such gifts as an amazing & practical idea. But a receiver who wants something right now may not appreciate it. For understanding how the stocks or savings plans work, it might take some explanation. And money is not worth the resentment that it might cause in the family. Following are some merits and demerits of famous financial gifts:-
1. Case
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Cash is quiet easy to get and to give as well, but it doesn’t build that much value as other options do. For a big gift you might want to take note of putting the cash in a mutual fund or other long term investment.
2. College Savings
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A very good suggestion by financial planners of the gifts given to young children is by contributing to their college savings plan. This feels good when it is something tangible and doesn’t going to end up under the bed or lost at the beach and they will be able to see it growing.
3. Paying Student Loans
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The total average debt for a US bachelor’s degree at graduation was $35,000 (Dh128, 527) previous year, so a worthy gift for many young people can be helping to reduce it. A cheque will do or you can be paid to the lender directly.
4. Giving Stock
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A method to encourage an interest in investing over the long term is giving stock. The consequences of capital gains of cashing in the share by themselves are the thing a giver might avoid. But implications of it can be tricky based on the receiver’s age, the stock value and other factors, so consulting a professional can prove worthy.
Stockpile permits anyone to purchase a gift card for an amount of a dollar worth of stock, instead of the price for a share. Purchases can be as petty as $1. Wrapping them like a gift-card makes it easier to give stock as a gift.
Most of the Stockpile’s customers are people who give gifts to a younger generation – around 50% of the account holders are below 30. Several companies also buy stock as gifts for their employees. It’s like a society where you consume and buy; here is something that is going to last, potentially for multiple generations.
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