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Financial Gifts This Holiday Season

'Tis the season to give, so why not think about a gift that keeps on giving and provides a long-term benefit? Here are five ideas to give the gift of money and financial well-being this Holiday season:

1. Stock

Buying stock as a gift is a great way to captivate younger generations and start teaching them about the power of compounding and investing.

To enhance the interest, consider purchasing companies the recipient is interested in and frequently uses. For example, if you have athletes in the family, consider stocks like Lululemon (LULU)* or Nike (NKE)*.

For a more broadly diversified option, consider a low-cost index fund like Vanguard's Total World Stock Index (VT)*

2. 529 Contribution

With rising costs in education and child care, it's becoming increasingly difficult for young families to save for their children's futures. 529 plans are a great way to jump start a savings plan for college or other educational purposes.

529 plans receive preferential-tax treatment and can be used to pay for current and future qualified-education expenses. Anyone (related or unrelated to the beneficiary) can contribute to a 529 plan and depending on your state of residence, you may be able to deduct all or part of your contribution.

3. Roth IRA Contribution

If the beneficiary of your gift is earning income, he or she can start funding a Roth Individual Retirement Account. You can also help fund the account on his or her behalf.

Contributions are limited to the lesser of earned income or $6,500 in 2023**. For example, if the beneficiary earned $2,700 that year, then the contribution would be limited to $2,700. If the beneficiary earned $20,000, the contribution would be limited to $6,500.

Roth IRA contributions can provide massive, long-term value. A Roth IRA contribution of $6,500 for a 20-year old could grow to over $135k by the time they're 65***.

4. One-Hour Planning Session With a Local Financial Advisor

Most college students and young professionals don't possess the financial complexity that would warrant hiring a full-time financial advisor. However, they might benefit from a meeting with an advisor to talk about how much they should be saving, what they should be investing in, and how to manage any existing or future debt.

For a more cost-effective option, consider gifting a personal finance book that will equip your loved one with the knowledge and principles to live a financially-successful life. Books like, I Will Teach You To Be Rich by Ramit Sethi or Nick Murray's Simple Wealth, Inevitable Wealth are illuminating reads for novice investors and those seeking control of their financial futures.

5. Charitable Gift in Their Name

Instead of worrying about the perfect gift, consider making a donation in someone else's name. Most charitable organizations now provide personalized gift cards explaining how the donation has impacted the world or changed someone's life.

For tax purposes, consider donating appreciated stock to the charity, rather than cash. Employing this strategy could provide a tax deduction in the amount of the full-market value of the stock. As a bonus, the donor would not owe any capital gains on the gift.

Also, check if your employer has a charitable-gift-matching program that will stretch your dollars even further.

To prevent gift tax implications, donors must give $17,000 or less per individual in 2023. This limit does not apply on donations to 501 (c)(3) organizations.

Whether you decide to pair your financial gift with something more tangible, your thoughtfulness will surely be appreciated for years to come.

From our family to yours, we hope you have a very blessed Holiday season!


* Should not be considered investment, tax, accounting, or legal advice. Not an offer or solicitation of an offer to buy or sell, or as an endorsement, of any company, security, fund, or other securities or non-securities offering. The information should not be relied upon for purposes of transacting securities or other investments. Your use of the information is at your sole risk. The content is provided ‘as is’ and without warranties, either expressed or implied. Inspire Wealth Partners does not promise or guarantee any income or particular result from your use of the information contained herein.

**Account owners 50 years or older are eligible to contribute the lesser of earned income or $7,500 in 2023.

***Assumes a 7% annualized rate of return.


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