I’m the proud grandmother of 3 grandsons. Every year about mid- September I start asking what they might want for Christmas, and usually within a few days I get a list from each with a few items. By Halloween, a few more items have been added, and by Thanksgiving, the lists are complete. By then, all three have added, deleted and duplicated items on their list. Now it’s time to weed through to figure out exactly what it is they really want and decide what I feel they really need.
Over the weekend my daughter and I decided to compare our lists and make a plan, deciding what she and her husband would get, and what we would get from the list. We quickly noticed that the two younger boys were asking us both for the same items. She decided to ask them why their lists were so similar, and the youngest one, who is 11, replied, “We want to make sure we get everything we ask for, so we decided to include the things we really, really wanted on both of our lists.” They talked it through and decided that this was a sure way to get all the items they wanted.
I decided that I needed to come up with a list of my own. And though some of the items I came up with might not be the trendiest items or at the top of the hot toy list this year, they will help my grandsons in the future. The following are a few of the items on my newly created smart gift list for my boys.
Coverdell Education Savings Accounts (ESA): A Coverdell ESA can be used for college tuition, private secondary school or other education expenses. Coverdell allows families to save up to $2,000 a year for students under 18. Coverdell funds grow tax-free, and are only as profitable as their underlying investments.
If paying for college is your goal, take a look at 529 Plans: 529 Plans offer federal and sometimes state tax advantages. 529s come in two forms:
Prepaid plans which allow grandparents to purchase tuition credits at a rate that is nominally higher that today’s prices and trade them once the child is ready for school;
• 529 savings plans which allows families to select an investment portfolio with a specific account. Both offer tax-free growth.
• Stocks: Stock have the potential to increase in value, but they can also drop. Gifts of stock, bonds or other securities are subject to tax regulations.
Investing in your grandchildren’s financial future is never a bad idea. They may not see whatever smart gift you choose to give a hit on Christmas day, but they will thank you later.