I really enjoy the Christmas season! Everything is so festive and there just seems to be a feeling in the air. Lights start popping up in neighborhoods, Santa makes appearances at local malls, and little boys and girls are on their absolute best behavior in the hopes to stay on Santa’s “nice list.” With the holiday season in full swing, I cannot help but notice the stores becoming more crowded and shopping carts filled to the brim. One of my daughters’ favorite movies is “The Grinch” starting Jim Carrey. I’ve watched the movie more than most and have pretty much memorized every scene. All the holiday shopping reminds me of the scene where the Grinch tells all the Whos in Whoville where all their Christmas gifts end up – Mount Crumpit. The phrase “Dump it to Crumpit” appears on all the Whoville garbage cans. I cannot help but wonder where most of our Christmas gifts end up. My bet is that most gifts are kept for a short time, and then forgotten or tossed out with the trash.

Don’t take me for a Scrooge, I really do love Christmas! This year, however, I challenge you to give your children and grandchildren something they can hold onto forever. One of the greatest gifts I ever received were shares of Ford stock from my Grandpa and Grandma. The amount wasn’t large, but the best thing I received was the excitement and knowledge of investing. That gift sparked something in me and helped me get started investing at a young age. As clients of Peterson Wealth Services our offer to you is to help your children and grandchildren start investing. We will waive our account minimums and be available to educate them on their options to get started. Below are a few ideas for you to give this Christmas season:

  • Start a 529 Education account – Very simple to set-up with a variety of low-cost investment options. The account is owned by one person on behalf of the beneficiary. For example, a grandparent owns and controls the 529 account with a grandchild as the beneficiary. Tax benefits include tax-deferred growth and tax-free usage of funds if used for qualified expenses.
  • Start a UTMA account A great option for kids who would like to get started investing, but are not of age to open their own investment account. Also, a UTMA account is a good option for those who are not sure higher education is in their future. The funds do not need be used for higher education, but they do not receive tax-deferred growth.
  • Open a Roth IRA Great for younger people that can show an income. In my opinion, a Roth IRA could be one of the best accounts for a young person. As the account is funded and invested each year, the growth isn’t taxed. And, if qualified distributions are taken after age 59 ½, they are withdrawn tax-free.
  • Gift highly appreciated stock If you have a holding that has highly appreciated you can gift up to $15,000 of shares to anyone. The benefit is you provided the generous gift you were hoping to provide and it is very likely that your child or grandchild is in a lower tax bracket than you. This means they may be able to sell the holding with a lower tax obligation or can continue to hold the shares.

I offered a few gift ideas with brief explanations above. Please reach out to us to discuss in more detail. I believe giving the gift of investing will have a much larger impact on today’s youth. Hopefully they take you up on your offer and accumulate enough in their lifetime to turn right around and start giving to others one day.

 

Favorable state tax treatment for investing in Section 529 college savings plans may be limited to investments made in plans offered by your home state. Investors should consult a tax advisor about any state tax consequences of an investment in a 529 plan.

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