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One of the most coveted holiday gifts of the year can be a surprise.
About 65% of Americans want financial investments like stocks and cryptocurrencies as gifts this year, according to a report Recent surveys of more than 2,000 adults from MagnifyMoney.
Additionally, about a quarter of those surveyed say they’d rather be an investment than a gift card, and even more would prefer a financial gift over a book or box.
“I think people are thinking about money, for better or for worse,” said Ismat Mangla, senior director of content at LendingTree, the parent organization of MagnifyMoney. works fine even with a few drops caused by Covid. “There is nothing like a gift that will continue to increase in value.”
Investing in the stock market is a great way to grow an exponential monetary gift; this year until the end of Thursday, S&P 500 Index increased by more than 24%.
Buying stocks for your children is relatively simple.
Judson Meinhart, a financial planner and financial planning manager at Parsec Financial in Winston-Salem, North Carolina.
To do so, parents need to set up a custodial brokerage account – commonly referred to as a UTMA (Unified Conversion Act for Minors) or UGMA (Unified Gift Act for Minors) account. minor) —for their child or another minor in their care. The guardian can then buy the shares they want through the account for their child.
Once the child who owns the account reaches the age of 18 or 21, depending on the state they live in, they have full control and can use the money as they please.
If you’re looking to gift an adult friend or family member, you can usually transfer shares from your brokerage firm to them if you have their account information.
You can also donate stock you currently own to nonprofit charities as a donation, instead of writing a check.
This comes with a number of tax advantages that make it attractive. If you provide assets directly to Eligible charities, they do not have to pay capital gains.
According to Mark Jaeger, tax development manager for TaxAct, a software provider, you should only give stock to charity because you really want to do it.
“It’s the spirit of wanting to do and then wanting to do to support a particular charity,” says Jaeger.
In general, giving away certain cryptocurrencies is also very simple, especially the most popular ones like bitcoin and ethereum.
Companies like Coinbase, Binance, CashApp and Robin Hood hero allow users Various coin gifts to others, sometimes via email gift cards, if the recipient doesn’t already have an account or e-wallet. To access the gift, they will need to set up a gift that can store cryptocurrency.
These platforms also allow people to deposit portions of coins, which is useful because many cryptocurrencies are very expensive. For example, one bitcoin is currently worth more than $47,000.
You can also give people digital wallets as standalone or with crypto, as they will need them to hold and track their new assets.
While it may seem risky to give someone crypto as a gift, it can actually be a great way to help them try the asset class, according to Mangla.
“Receiving a gift is a great way to discover it without having to shell out your own pocket,” she says.
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If you’re looking to give a child money that will be invested and developed over time, there are a few other ways to do it.
You can help contribute to 529 plans for their future education. If your kids have a job, you can also help them set up a Roth individual retirement account and contribute money or gift assets that way.
Such plans do not offer the same flexibility as a custodial brokerage account. If the child ultimately decides not to go to college, it can be difficult to access the money in the 529 plan without penalty. With a Roth IRA, they need to have earned income and there are limits on how much they can contribute and how much they can withdraw before retirement.
With a custodial account, there aren’t any limits on how the child can use the money. Such an account also gives parents or gift-givers more choices about what they can give.
If you are giving or giving away stock, there are several things that both the giver and the receiver must consider.
It can be beneficial for people to donate shares to avoid paying capital gains tax, but that means you’re passing a potential tax on to whoever you’re donating. However, it could be worth it if the person you’re giving it to has a lower tax bracket. Depending on their income, they may pay 0% capital gains tax.
And, if you give away more than $15,000 per year, including stock, you must file additional paperwork with the IRS. You may also be subject to gift tax, but only if you’ve given more than the current lifetime limit of $11.7 million.
If you want to get the most out of donating stocks and other assets, a financial advisor can help you with the process.
Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.
https://www.cnbc.com/2021/12/17/americans-want-stocks-and-bitcoin-as-gifts-this-year-what-to-know.html Americans want stocks and bitcoin as gifts this year. What to know