Am i a Grandpa if i get my nephew a Savings Bond?
Cuz i gotta tell you, it sure feels like it ;) I don't know about you all, but that's alllll i got growing up from the g-parents! Birthdays, holidays, confirmations, you name it. A big, fat, weird paper looking thing that we weren't able to cash.Of course, back then if it couldn't be played with or eaten, i didn't care what it was! haha..but NOW i'm like "Hot damn i got some bling bling in my safe!" That's an extra $500 smackers i have access too.
That being said, do i really want to go down as the next Grandpa in our family? Sure I find them sexy as hell, but would a 1 year old? (okay yeah, that sentence didn't come out right at all). I'm not sure to be honest, so i say it's time to play the ol' Pros vs Cons game! This usually helps sort it all out.
PROS of Gifting Savings Bonds:
- Double the present, for half the money! If you pick up an EE Savings Bond, you only pay half of what it'll one day be worth. So if i go the $50 route per my holiday budget, i can actually give a $100 bond! And even if the kid can't wait the 20 or whatever years, it'll ALWAYS be worth at least the original $50 you plopped down.
- You can buy them online. That's right, so as i sit here typing away 3 days before Christmas, all i have to do is hop over to TreasuryDirect.gov and fill out a little info! Of course, you could also just slip into your neighborhood bank as well. (Update: #1 - there's a 2 week waiting period once you sign up online :( #2 - some banks stopped issuing them...Our local M&T bank stopped, BUT our local credit union still does them! Filled out the form and good to go now)
- You can buy one for ANY amount. Have a budget of $25? no problemo. $200? works for me! If you're picking up an electronic EE bond, you can actually buy them to the penny with a min. of $25. If you go the paper route, the denominations are $50, $75, $100, $200, $500, $1,000, $5,000, and $10,000. Remember though, you only pay HALF of that with the EE bonds.
- No wrapping required! It's like giving yourself a gift :) Or if you prefer, you could always print out the online "gift certificate" Treasury Direct concocted and wrap that little guy up too....i don't know why, but it cracks me up. Click on the picture up top to see what i mean ;)
- Your Grandparents will smile down on ya :) Yup, that's a fact Jack.
- You'll be perceived as an old fart. I think we pretty much covered this one...
- It can't be used anytime soon. Not so great for instant gratification.
- It's sorta like giving cash. While it's def. an investment, you're still handing over money.
- It may get lost over time. If in paper form. (You can always purchase electronic bonds through Treasury Direct though, and/or convert your old paper ones.)
- You'll get thanked 20 years from now... Unless the kid is the next Warren Buffet, he/she won't actually appreciate your thoughtfulness until they grow up ;)
Any of you ever give the gift of investment? And did it go over smoothly?
posted by J. Money at
10:05 AM
20 Comments:
I give my god daughter cash for her RESP ( she's 2). I wished I had been smart and asked people to fund my DD's RESP instead of buying her crap!
I think it's an excellent idea. It might not be as cool as a shiny new toy, but they will thank you once they're grown.
With education costs skyrocketing, I'm surprised parents aren't giving away their kid's 529 plan routing numbers instead of asking for Christmas presents.
It's very sensible. Who cares if it makes you grandpa. I give the kids books and they just love it....(right)
I am kinda stuck with this too. I want to start giving some sort of investment money that they can use. However, for purchasing a savings bond you have to have their SSN and that is hard to get from some people, and is annoying having to get it. Second is that is some really crappy returns, yes it is guaranteed but only double in 30 years! Using rule of 72 that means a 2.4% return I think. Like you said they are kinda boring, I have given some as gifts to the really young ones.
Another advantage of them is there are not any fees or anything related with them at all.
Now, I am trying to look at what it takes to give STOCK, not savings bonds. Some advantages is hopefully much better returns over a long savings period (20 years). They own a piece of a company and that is pretty cool, tell them they own some of Disney or something like that. Problem is you can not hardly get paper stock certificates without huge fees, but just make something and print it out if you want to. Could lose some of the money. Still hard to purchase and give to them electronically and without being their parents.
I am looking into what it takes to open or have their parents open some accounts, with these accounts you can not make changes until they are old enough.
Another option is DRIPs, Direct Reinvestment Plans that go directly to a company and usually don't have as much for purchase fees and transaction fees.
What are your thoughts on this stock for gifts instead?
I think it's a great gift for a one year old. They don't care what your getting them. Name one thing you got at your first birthday. Go on... name something. Oh, don't remember? Cause you were ONE!!
You are really getting something for the parents when get something for a baby. So if you think the parents will appreciate it then it's a good gift. Plus, if they are like most kids I know... they already have more than enough toys.
As a parent I hate when people get my kids savings bond. Not only is it a bad investment but because it is a piece of paper it could be lost and then all the money is gone. I now just cash them in instantly and deposit the money in the kids 529. What would be a better plan is to see if they have an 529 setup and if not help the parents starting one and just deposit the money in there.
@An ostrich named Sam - haha, good thinking! i'll have to make a note to ask for something similar when i have kids :)
@Matt SF - yes, indeed! i actually tried to open up both a 529 and a Coverdell, but you need to deposit a min. of $250 for each and i couldn't get anyone to go in it with me...but you better believe i'll have them when it's my turn!
@JD Maybe - i always liked getting books...as long as they had big colorful pictures of dinosaurs in it ;)
@Philip - well i actually just filled out a form here and you can use your own SSN too if you don't know theirs, but it's still kind of weird...and yes, i never thought (oddly enough) about giving Stock as presents but i'm totally digging that! you're right for sure though, it *would* be hard to do, ESP if it's not a family member - i guess that's why the savings bonds are so popular as gifts? i'd say you could just give the parent cash to do it for them, but unless you REALLY trust them (and know they have a brokerage acct) it'll be pretty hard to rely on. the idea itself is hot most. definitely :)
@Ashley @ Wide Open Wallet - hahaha....you crack me up girl :) but you're right, he has wayyy to many toys anyways, plus i'm already getting 1 or 2 for his stockings...oh, AND a Redskins jersey just cuz i couldn't help it....that put me $20 over budget, but whatever - it's freakin' AWESOME!
@Matt said - i'm totally with you man, i just wish the 529 didn't have the $250 initial deposit limit...or the monthly required deposit (although the Coverdells don't). i literally JUST tried to buy an electronic one too, but looks like there's a cple weeks waiting period before you can start doing it.....ARGHHHHH, so i resorted to paper. I'm gonna print out the directions on how to convert them over though for my sister :) appreciate your input.
I'm with Ashley - in fact, if you want to give the kid something he will love... try a empty cardboard box. Seriously, little kids love them. Then slip his mom the bond. I think it is a great gift and wished my gramps had done it for me.
I am lucky enough to have an Uncle who sends me £80 each Christmas (or £100 this year!) who I rarely see. This year I've put the money aside to start off my shopping spree fund but I can't think of a single thing he's ever bought me. I just wish he'd given me that money in bonds or savings.
When I'm an aunt I'll be putting money into savings for each birthday/christmas for my nephews and nieces and giving them a small gift so they have something to open. They might not think I'm the coolest aunt in their teens but when they hit 21 and get all that cash they'll love me!
Nice, J. Money. We gave my bro-in-law $50 in an ING Savings account last year for his greaduation. I haven't checked to see if he's been saving. It's likely he's just spent it all since he's broke and in college. Hopefully the message (that he needs to save) at least sunk in and is still around.
In your list of cons you said that you will be perceived as an old fart... okay well that's probably true.
But as far as it not being able to be used any time soon - you can cash them in after 1 year - there will be a penalty of 3 months interest if cashed in before 5 years but other than that your golden.
If you lose it - you can file a lost bond form with the Treasury and have it replaced.
Just my two cents.
Haha, nice, Gramps! I actually just told my 26 yr old best friend that her son is getting school/investment money only from me. When he's born, that is. I'm a sucker for kid's toys and clothes because everything that small is cute (except Chinese cresteds *shudder*) but her parents will more than take care of his needs in that department. Ok, he might get a signature baby blanket to carry around like PigPen, too, but that's it!
And he can complain all he wants when he's ten, because he'll be coming to Auntie Revanche Boot Camp around that age and she'll show him what's up! ;)
In all honesty, I wish someone had given me an investment! I think it's a great idea :)
Your nephew will thank you when he's older! My dad has bought savings bonds for my brother and I since we were around 5 years old and we definitely thank him for it. The only drawback is that once your nephew cashes it in he'll be on the hook for paying taxes on it.
@Dawn - OooOoooOoooh i like that. i've got mad boxes piled up over here too....but if my family laughs at me, i'm comin' after you ;)
@Holly - hell yeah they'll love ya! but not just cuz you give the money (although it will help) :) he he...i bet you'd be a fun auntie.
@PT Money - yessir, i surely hope so :) i'm sure it went to a keg of Beast Light! haha...
@Banker Bryan - thanks bro, all good stuff to know!
@Revanche - hahaha...i want to go to Auntie Revanche's Boot Camp! i promise to bring you a few hairless dogs ;)
@Kaitlyn - i'll have to tell our folks ;)
@Budget Save Buy - NICE! Do you know how much you guys have accumulated at this point?
Savings bonds are old-school, but still an awesome investment. My grandmother and uncles always gave me savings bonds, and I never knew the difference, especially at the holidays ... it's not like the kid won't be getting any other gifts... right? (One never knows, with the current economic situations.)
I've kicked around the idea myself, but like Philip said, getting the SS# can be a bit of a drag. For a relative, though, I'd go through the hassle.
My nephew is still young enough that he doesn't understand the difference between a $.99 toy and a $99.99 toy. So I generally give him a savings bond for later and a cheap toy or book for now. I figure it's double the fun.
Ha! You'll come across as an old fart, thats for sure -- my godmother always used to give me savings bonds. Thankfully, my mother would always take them and put them in the safe deposit box. We forgot about them for a while, but looking back its great. My godmother just got some long-overdue appreciation.
My grandparents created a savings account for all of their grandkids and cashed it out when three of us were in college. (Unfortunately, I'm the oldest so the money didn't come to me until this past summer, almost the end of college!) Even though it's not the coolest gift, I think your nephew will greatly appreciate it later in life. I know that $300 really helped me with bills and debt.
I hope so :) It's not like he really knows what he's getting this young anyways! haha....he just turned 2 so I'll have to see if I'm going for round #2 w/ the savings bonds here, or if I'll cave in and give him toys.
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