While it may come naturally to some, finding the perfect holiday gifts can be daunting…
Add in coronavirus uncertainty and supply chain issues, and the task becomes even more stressful and uncertain.
This year, my family and I will be spending the holidays on the North Shore of Oahu, so I had no choice but to do all my present shopping way ahead of time.
But if you are behind the eight-ball right now…
Or you’re looking for an extra gift idea to get someone…
I’d like to share some investment-related ideas that provide far more value than another sweater or pair of socks.
Gift Idea No.1: An I-Bond
I recently wrote an entire article on these investments and why they’re so attractive at the moment.
But just to briefly recap…
I-Bonds are officially known as Series I Savings Bonds. And like their better-known counterparts – Series EE Savings Bonds – their value doesn’t fluctuate.
So, unless the U.S. government defaults, you cannot lose any of your principal by owning I-Bonds.
Of course, these bonds do pay interest, which is comprised of two components: a baseline interest rate and an inflation adjustment.
And while the baseline rate is 0.0%, the latest inflation adjustment brought the bond’s composite rate all the way up to 7.12%.
That’s the second-highest rate ever and much better than alternatives like money markets or CDs.
On top of that, I-Bonds are exempt from state and local taxes… And if the proceeds are used for qualified education expenses, profits can be exempt from federal taxation as well.
That makes I-bonds great gifts – especially for kids.
You can buy electronic I-bonds from http://www.treasurydirect.gov/.
Of course, you can also give what I consider an even better investment…
Gift Idea No.2: A Share (or More) of a Solid Dividend-Paying Stock
Back when I was a kid, Disney was one of the first stocks I ever bought. And I still remember receiving the physical stock certificate with some of the company’s colorful characters around the borders.
But what about giving a similar gift in today’s world of online brokers and trading apps?
It’s not as hard as it might seem… Websites like www.giveashare.com can streamline the process, including mailing out physical certificates.
You can also gift someone shares of stock you already own.
Under current IRS rules, you can give up to $15,000 worth per person per year without having to declare the gift or pay any gift tax.
What’s more, gifting shares lets you avoid paying any capital gains tax that might otherwise be owed.
Instead, the future liability is passed onto the recipient… And if they’re in a lower tax bracket, that could end up being a win-win situation.
The same tax rules can apply to other gifted investments as well, which brings me to…
Gift Idea No.3: Crypto
It’s no secret that we’re big fans of crypto here at Palm Beach Research Group. And many of our readers have seen firsthand how life-changing a small initial investment in crypto can be.
If you want to get someone else started on their digital asset journey, it’s relatively easy to give them a small of amount of bitcoin, Ethereum, or some other altcoin.
And what if you want to physically wrap something up instead of just emailing the details?
Well, there’s good news… You can give crypto through a gift card or a physical coin that contains a set amount of crypto.
Alternatively, you could buy someone a hardware wallet like the Ledger Nano X that I recently bought for myself. You could even load some crypto on it ahead of time or show the recipient how to buy crypto on their own after they unwrap the present.
And that brings me to my final idea – the gift of financial education…
Gift Idea No.4: A Good Investment Book
A good investment book might be the cheapest, quickest, and longest-lasting gift of them all.
And while there are hundreds of great titles, here are a few of my favorites…
On the “classic financial theory” side, I always recommended The Intelligent Investor and Security Analysis, both by Benjamin Graham.
Graham is the father of value investing and he taught Warren Buffett at Columbia Business School.
On the other end of the spectrum in what I would call “financially-oriented entertainment,” are books by Michael Lewis.
Works like Liar’s Poker, The Big Short, and Flash Boys provide great insights while also being real page-turners. I’ve also enjoyed other titles from Lewis like Moneyball and The Undoing Project, too.
In between these two extremes, you’ll find lots of other choices – everything from beginner guides to the world of crypto, all the way to detailed explanations of technical analysis.
At the end of the day, it doesn’t really matter what you pick. The point is simply helping someone else aim for greater financial independence going forward… Because that’s one of the greatest gifts anyone can ever receive.
Happy Holidays and Best Wishes,
Analyst, Palm Beach Daily