If boring and repetitive graduation gifts aren’t your style, try giving your recent graduate a gift that will help secure their future. One option is starting a dividend reinvestment plan (DRIP), where dividends are further reinvested in stock instead of being paid out as cash. Another good choice is to start their own Roth IRA and possibly offer to match their contributions to encourage them to save for retirement. Lastly, gifts of appreciated stock could be taxed to them at 0% as they are long-term capital gains, and could cost you no estate or gift tax if you give less than $14,000 per year. The best thing about all of these is that they instill a sense of appreciation for early investing and get your graduate started on the path to financial security.
See Carolyn T. Geer, “A Graduation Gift that Keeps on Giving,” The Wall Street Journal (June 8, 2014)
Posted by David Staggs, Associate Editor, Wealth Strategies Journal