This May, many of us will be celebrating a recent college graduate. Are the gifts you give setting up these graduates for success? A 2017 study from the National Retail Federation showed that Americans planned to spend upwards of $5.6 billion on graduation gifts—more than half of it cash. Here are four gift ideas that could start your graduate on the path to financial success:
1. Match savings contributions: A savings account can open the door to developing a savings habit. You could make the initial deposit or match a portion of the graduate’s contributions. Note: In 2018, for example, you could have given up to $15,000 per recipient without incurring the gift tax, $30,000 if you gave as a couple.
2. Fund or match contributions to an IRA: Opening a tax-advantaged Individual Retirement Account (IRA) is a practical option for graduates with smaller incomes (e.g., freelancing or ineligible for a 401(k) through their employer). Roth IRAs, funded with after-tax dollars, offer tax-deferred growth and tax-free withdrawals.
3. Give stocks with youth appeal: Gifting stocks that appeal to a young graduate is an effective way to pique their interest in investing. Think about what appeals to them—biotech, technology, or socially responsible investments—and include them in this decision.
4. Consider gifting appreciated stocks: Gifting appreciated stocks helps build the graduate’s assets while reducing your capital gains.
We hope these ideas help you support your graduate during this important milestone. If you have questions about these gift ideas, please give us a call at 864-467-9800.