Investments as gifts

Friday, December 30, 2016

Investments as gifts



The holiday season is now in full swing and not to freak you out, but holiday gift-giving time is around the corner. You may be searching for that perfect gift and probably in some sorts of ‘gift-giving’ stress right now; nobody dislikes receiving cash, but as the gift-giver you may want to bestow something that’s more personal. Perhaps a gift option you might not have previously considered is an investment/s.

I remember when I was little that I was gifted with a ‘savings account’ in a bank, it was something I could never forget. If managed properly, an investment will continue to pay you dividends for decades down the road.

Pooled Funds
ETFs, UITFs or Mutual Funds are an easy way to give an investment that will earn interest over time, a younger gift recipient might prefer an investment that, although risky, is more likely to provide bigger returns over 10, 20 or even 40 years. Some may recommend gifting stock market account instead of the usual savings account but this may require mentoring on your part as well.

A pooled fund on the other hand has lesser personal engagement or upkeep and the recipient is basically receiving the entirety of the market — not just a single investment, but a diversified portfolio of investments (bond, equity..etc..)! Also, some financial institutions have even offered an investment gift card version of this as well.

I have a friend who gave a 100k Single Pay VUL (1-time pay insurance + investment product) as a gift to an inaanak and then attach a letter that says “this should cover all the birthdays, and seasonal holidays for the rest of your life, enjoy it in 30 years!

Financial Advice
If you are quite financial savvy yourself, why not give the gift of mentorship. Gifting ‘financial advice’ may not be limited to giving it out personally, it can also be through sponsorships or ‘shouldering-the-cost’ of knowledge such as: books or the like educational materials, seminars and trainings.

Also, a trip to a qualified financial planner can help the recipient understand the value of money, savings and investing or even help them get out of debt!

Funding  Dreams  and  Experiences
Sure, cold hard cash is great, but it might be most effective if it is money earmarked for a specific purpose, such as paying for a car, travel or to establish a college education fund. As your children, inaanak (or even your peers) get older, spend time to work together on goals to make this happen.

Of course there is a limitation to this as sometimes you may not realize that there are strings attached to your gifts. Like giving a puppy without regard to its vaccinations, supplies, food, medical care..etc.. I’m not saying you should not gift property but also be aware if the one you are giving can sustain the strings attached to the gift (lifestyle costs, and the like).

Don’t  forget  about  Yourself
You can definitely still use the recommendations above to yourself, especially when you save your bonus. And you don’t have to gift during Christmas, there’s also the rest of the year.

“Happiness doesn’t result from what we get, but what we give.” -Ben Carson

Happy Holidays!

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The writer is an RFP® - registered financial planner of RFP PH, Licensed Real Estate Broker and Director of CERTA, Inc., a family estate planning and investment advisory firm. To know more, please visit www.certa.ph
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Originally Published in Philstar - The Freeman Newspaper last December 20, 2016.


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