Financial Gifts for Children

Richard Salmen, CFP, CFA

Savings bonds are traditional favorites but may not offer competitive returns and have penalties for cashing in the bond in less than five years’ time. Custodial accounts are easy to set up, but the money goes to the child automatically — generally at age 18 or 21, depending on how the account is structured and the laws of the state — and the accounts may reduce his/her college financial-aid eligibility. College savings plans, known as 529 plans, keep gift givers in control and may offer state tax benefits for the giver. Stocks can be educational tools as well as investments — to avoid big commissions for small investments, consider buying through companies’ direct-purchase plans or even buying fractional shares of stock through a brokerage such as

Bottom Line/Personal interviewed Richard Salmen, CFP, CFA, senior vice president and senior adviser, GTrust, a fee-only financial advice firm, Overland Park, Kansas.

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