Gifts That Makes Cents For Kids

The newest toy fad will keep the kids occupied for a few months until a newer one comes out, or they just grow tired of it. Teenagers like gift cards so they can choose their own presents. But recent studies revealed that billions of dollars in gift cards go unredeemed each year, and that the full value of the cards are never realized due to the fees charged by the issuer. Holidays may be over, but gifts are given year round and here are a few ideas that will not only instill financial responsibility, but give kids an early lesson on investing and savings.

Gold

There are few investments that can boast a 600 percent return over the past 10 years. Gold is the perfect gift because of its obvious splendor and its likelihood to further increase in value over the next decade. Bullion dealers such as U.S. Money Reserve sell gold coins minted in the U.S. at cost. A coin made of one-tenth of an ounce of gold would cost around $200, which is less than the latest iPhone or a fully loaded Xbox 360. Silver bullion is also a great investment and can be had in much larger quantities for far less money.

Certificate of Deposit

A CD is a great way to give the gift of cash knowing it cannot be spent for a given period of time. The lessons kids can learn with a CD are two-fold. They will be aware of a certain amount of money, plus interest, that will be available for them to spend in five years (or one, depending on the terms). The only downside is that interest rates on CDs are at their lowest levels ever because of the current policies of the Federal Reserve. These low interest rates are great for mortgages and loans, but discourage saving because of the low yield regardless of initial deposit. A teenager may take an interest in economics when their five-year CD with an initial deposit of $250 matures on their 18th birthday, only to have a value of about $269.

529 College Savings Plan

Named after Section 529 of Internal Revenue Service code, these plans are designed to encourage saving for future higher education. The plans are either of the pre-paid variety or a savings plan. The previous allows the investor to buy tuition credits at the rate they are sold on that day. In other words, it protects the future student from tuition increases. These plans, however, are currently only offered in 12 U.S. states and must be applied to a public institution in the state of submission. The savings plan is a de-facto trade account which the funds deposited are invested in various stocks or mutual funds. It works much like a 401K, as its value is based solely on overall market performance.

Charity

It is never too early for a child to learn about the gift of giving. There will be several millions of children across the country who will not get any gifts for those special occasions, due to their family’s financial situation. A charitable contribution in the name of the child creates an opportunity to explain this situation to them. Participating in a Cow Parade Auction, where the proceeds go to The Superhero Kids Endowment, and buying a cow sculpture helps your child know they will be making a less fortunate child’s holidays much better and get an early lesson in philanthropy at the same time.

About the Author:

William Noonan has been managing other people’s money since he was 25 and had his first client.  It was a hotdog vendor who became fairly successful.  Today he shares tips and suggestions for building a strong portfolio in his online newsletter.

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