Spending

4 last-minute smart financial gift ideas that go a lot further than cash

"If you're giving to a child, it's an easy way to spark interest in investing."

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It's getting to be holiday gift-buying crunch time. Maybe you've procrastinated and need to find a curbside pickup deal. Maybe you shopped online early, but just received that dreadful email informing you that, sorry, it looks like your package may not arrive in time to make it under the tree.

If by this late date you're at a loss for what to give, consider purchasing an investment for your recipient online. Not only will you avoid the awkward (but necessary) conversation about why you've gifted your nephew a computer printout of a Lego set yet to come, but you could also set up someone in your life for a financial future that's merry and bright. 

Give stock in the form of a gift card

Investing apps such as Stockpile make gifting stock as easy as picking up a gift card at the supermarket checkout. Choose a dollar amount between $1 and $2,000 to put on a card that the recipient can cash in for shares of stock.

Because the app offers fractional shares — stock that can be purchased for amounts below the full-share price — your loved ones can purchase any stock they like with your gift. "That way, if you want to buy someone Apple stock, you don't have to come up with hundreds of dollars," says James Royal, an analyst at Bankrate.com. "If you're giving to a child, it's an easy way to spark interest in investing."

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Open a custodial account for a kid

If you buy stock for a child on Stockpile, you're opening a custodial account — an account that is considered the minor's asset but that is controlled by an adult until the minor reaches a certain age, usually between 18 and 21, depending on state laws.

Stockpile includes some cool features for kids, allowing them to make wish lists for stocks and even trade given the custodian's permission. You can also open a custodial account at any major online brokerage and avoid Stockpile's 99-cent commission fee on stock trades.

If the goal is to get a child interested in investing, consider buying some stocks the kiddo is interested in, says Ben Fuchs, a certified financial planner and founder of Fuchs Financial in West Hartford, Connecticut. "No one cares more about their stocks than a 12-year-old saying, 'Wow, they're going up — this is so exciting,'" he says. "And it's great, because they can't trade out of it. The reality of investing is, I'm going to hold this for 10 years. Everyone wants to day-trade and buy and sell out of things. But you learn more about investing by seeing how a stock reacts to news over time."

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Jump-start a loved one's retirement savings

If the goal is to kick-start a child's retirement savings, go for low-cost, diversified mutual funds or exchange-traded funds rather than individual stocks, says Fuchs. "That way you're not going to worry about the stock you buy becoming the next Radio Shack or Sears," he says.

If the child you're buying for has earned income, say, from a summer job, you can open a custodial Roth IRA, which brokerages such as Fidelity and TD Ameritrade offer with no investment minimum or maintenance fee. You can contribute up to the lesser of $6,000 or the amount of money that the child earned this year.

That can come in handy later, as the investments in that account will grow tax-free and the recipient won't have to pay taxes on the money when they eventually withdraw it in retirement.

Help fund a 529 account

Anyone can contribute to a 529 plan, a tax-advantaged investment account used to fund a child's education expenses. You'll have to contribute cash, since 529 funds must be invested in a pre-set roster of investments offered by a state's 529 administrator. Depending on the state your recipient resides in, you may be able to send a gift card toward their 529 via Ugift, GiftofCollege.com, or the GoTuition gifting portal.

Head to SavingforCollege.com to see which programs apply for which states. Depending on where you live, you may qualify for a state tax deduction for your 529 plan contribution as well.

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