The Best Ways to Give Money Without Giving Cash
In a way, money is the perfect gift. It is liquid, which means that the recipient has free rein to do whatever he wants with it. Cash is the easiest way to give money, and no one is ever going to be crazy about getting a box of twenties for their birthday, but if you’re not Robert De Niro in a Scorsese movie, giving money is a bit basic. It has a real “I don’t care to buy something” atmosphere and the inevitable possibility that you completely forgot to receive the gift and literally pulled out your wallet when you got to the door. In other words, money is welcome, but it is also a gift that requires little effort.
However, there are ways to combine at least some of the benefits of giving people money with a slightly more thoughtful feeling and more informed experience. With a little more planning and effort, you can enjoy all the glory of making friends and family rain, unaware that you are a secret drug lord, using your loved ones to launder Walter White’s money. stacked somewhere in the warehouse. If you are planning on donating money to someone this holiday season, here are some tips to improve the experience.
Give money to children
If your giver is a child, you know that all the money they receive will be spent on V-Bucks and PokéCoins. Here are some ways to give your kids money they will thank you for later:
Savings deposit
Old school savings bonds are a great way to give a young person some cash ($ 25 to $ 10,000) with the benefit of earning interest and a little education on how money works. Minors are allowed to own savings bonds and they receive interest for 30 years after purchase (you can cash out after 12 months, but you could lose some interest if you do this too early). The days of buying one from your local bank are over – you can only purchase one through the US Treasury Department’s website at www.treasurydirect.gov . Your recipient will need an account to receive the gift, but you can purchase a deposit, print the certificate, and keep it for them until they do so.
529 account
Creating or participating in a 529 plan is a great way to give your child money specifically earmarked for their future education. You can set up 529 for anyone, and while the money you deposit comes in after taxes, the account will run tax-free interest – and that won’t hurt their chances of getting financial aid when the time comes, because the asset is technically owned by the custodian accounts. Considering how expensive college is and how damaging student loans can be, this is a great gift.
Child retirement account
Most people don’t know that you can contribute to an Individual Retirement Account (IRA) at any age as long as you have earned income. The IRA must be set up as a “custody” account with a responsible parent or guardian, and you have the same choice between a traditional IRA or a Roth IRA (paying taxes on withdrawals from a traditional IRA and paying taxes on deposits using Roth) as you do with accounts for adults. But when you consider that retirement experts always stress that it’s never too early to start saving for retirement, investing some money in an IRA for the kids in your life is a terrific gift.
UTMA account
In accordance with the Law on single transfers to minors (UTMA) you can open an account with the depot on the child’s name and set the parameters of its access to cash. The child will own the assets in the account and the gift is non-refundable. You can decide if they can access the cash when they reach the age of majority in your state (usually 18 or 21) or later, and you run the show until then, making all investment decisions. However, once the recipient takes over the management of the account, it is their right to dispose of it as they please, and since the asset is theirs, it will count towards any financial aid applications they submit to college. This makes the 529 account a much better option if you want to help them pay for college.
Trust Fund
You can think of trusts as something that only the very wealthy can create, but anyone can create a trust. A trust simply sets aside certain assets – from money to property – for the benefit of an individual or group. A “living” trust simply means that the principal — that is, you — is alive. The great thing about a trust is that it is incredibly flexible – you can set just about any rule you like regarding access to assets, and you can even structure it as a “incentive trust” that only pays out if your the giver does certain things. for example, a college graduate. On the other hand, trusts are quite complex and expensive to maintain and can be viewed as controlling and manipulative if you set too many rules.
For adults
If your recipient is an adult, we have other ways to donate non-dollar cash. They are:
Gift cards
Look, they’re not sexy, but a gift card is just as good as cash in most situations, and it shows a little more thought and planning than a bunch of sweaty, wrinkled bills shoved into someone’s hands. You can find them on sale just about everywhere, and they also offer many safety benefits. You can even personalize them on sites like www.giftcards.com by choosing a design or even adding a personal photo.
Certificates of Deposit (CD)
Some people recommend CDs as gifts for children because they are a good way to teach them the interests and value of saving. But the interest they earn is taxed, making it a headache for the kids. On the other hand, for adults, a CD is a great gift because it’s two gifts in one – the amount you deposit when you set it up for them and the interest they get when the CD matures.
Stock
It is better to give someone a share of the company than to give them money because you are giving them ownership of something of value that will hopefully go up in value. And while you can simply shift some of your own stocks (from a mutual fund, for example), you can also purchase special stocks on a site like Give a Share for a more personalized experience. Keep in mind that depending on the stock you are gifting, your recipient may have some capital gains tax liability, so check with a financial advisor before proceeding.
Cryptocurrency
Do you want to be at the forefront? Like saying the word “cryptocurrency”? Giving away cryptocurrency is more fun than traditional cash and potentially more profitable (although it’s important to remember that cryptocurrency is the very definition of volatile investments). It’s also easier than you think if you stick to well-established major coin exchanges like Coinbase . The easiest way to provide cryptocurrency is to send your target a gift card, which can then be redeemed when the recipient sets up the wallet. There are no taxes levied on the giveaway of cryptocurrency, but remind your donor that taxes will be levied when and if they are cashed out.
Gold
Want to impress by pretending to be some kind of Bond villain? Giving your gift of gold is a really cool factor as well as real value. Gold is considered a safe investment because its value is stable and tends to rise in price even when the economy is in decline. Also, unlike other monetary gifts, it is a material beautiful physical object. While gold coins (which you can purchase from a reputable dealer like JM Bullion ) are popular because they are attractive objects, you will pay more for them because they are considered collectibles. Gold bars still have a lot of wow at no extra cost.
Charitable donation
Sending money is not always a direct transfer – sometimes it may involve paying the recipient’s money. Making a donation to a significant charity on behalf of your donor is very personal and saves them the trouble of making the donation themselves, freeing up their money for other purposes. In this way, you will achieve your goal of increasing the cash flow of your loved one while benefiting the world and making it feel good. This is a win-win.
People like to say that money cannot solve your problems, but the fact is that almost every problem we face in our life can be very effectively solved with some money. Just keep in mind that if you plan on being really generous with your donation, there are limits to how much money you can donate without worrying about taxes . Choose the right format for your cash gift and be prepared for some pretty generous thanks.