Financial gifts – and tips – for new graduates
It’s graduation season again. If your child is graduating from high school or college, you have reason to celebrate. But what should you give to your newly minted diploma holder? You might want to consider oﬀering a combination of financial gifts and tips, which, taken together, could set your graduate on a path toward a successful, independent life.
What sort of gifts and tips should you consider? Here are a few ideas:
Give a few shares of stock. Everyone should understand the financial markets and how they work. One great way to encourage this interest is to give your child a few shares of stock. Young people enjoy owning a piece of a company that makes the products and services they like – and the very act of ownership can inspire them to learn more about investing and to ask questions: What causes the stock price to go up or down? How long should I hold this stock? Should I own several stocks like this one, or is it better to branch out to find new opportunities? Over time, in learning the answers to these and other questions, your child can become familiar with investing and how to make the best choices.
Encourage your graduate to open an IRA. Your child can open an IRA as long as he or she has some earned income. You might want to suggest that your child consider a Roth IRA, which, at the child’s age and income level, may be a good choice. With a Roth IRA, children can access their contributions at any time, tax- and penalty-free. They can’t touch the earnings without incurring both taxes and penalties, however, until they reach 59½. But you will want to encourage them to keep the money in their IRA intact, giving it the chance to grow.
Provide some financial education…
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