Uncover the Wisdom of Warren Buffett's Christmas Gifts
Financial Gifts that Can't be Squandered
When Warren Buffett gives financial gifts, it's worth taking notice. His choice to give gifts that couldn't be readily spent makes us rethink cash gifts. A session with a financial adviser can help people prioritize their financial goals. Whether starting to save or nearing retirement, a financial check-up brings clarity and helps them make choices to get closer to their goals, like buying a home or meeting retirement savings objectives. Wealth management firms offer various services, from detailed savings plans to home-buying advice.A one-time financial plan, an insurance review, or a 401(k) allocation check are other ways family members can benefit from a meeting with a financial professional. It's about setting the right financial foundation for the future.
For example, by getting a proper financial check-up, individuals can identify areas that need improvement and take steps to address them. This can lead to better financial decisions and a more secure future.
Match Roth Contributions for the Future
Gifts can be more than just material things. Consider introducing the concept of long-term saving to younger family members by offering to match contributions to a Roth IRA. This can encourage them to save for the future instead of spending on unnecessary items.Recent college graduates especially appreciate the opportunity to save more. By demonstrating the power of compounding growth, you can make the offer more memorable. For instance, a one-time contribution of ,000 in a Roth IRA can grow to about 9,550 in 50 years with a 6% investment return and monthly compounding.
The biggest obstacle to opening a Roth IRA for a minor is having earned income. But you can open a custodial Roth IRA for your minor grandchildren. The retirement account is owned by the minor but controlled by an adult custodian. Remember, contributions to a Roth IRA can be a gift within the yearly gift tax exclusion.
Gifting Appreciated Stock for the Legacy
If thinking about legacy, gifting stocks is valuable. Few gifts have the potential to increase in value over time. Gifting stock to kids can be done through a custodial account, and to adults with a simple transfer.For minors, an UGMA or UTMA account allows gifting securities. But it's important to note that the funds in the account are considered the child's assets and may affect financial aid. There is also the Kidde tax on unearned income. However, Plante Moran's Ms. Eckels highlighted the tax and estate planning benefits of gifting appreciated stock.
By gifting appreciated stock, you transfer the gains to the recipient and avoid capital gains tax. This is a strategic way to give a gift that can have long-term financial benefits.
Buffett is a long-term investor who focuses on a company's future potential. This philosophy can be applied to our investments. Building a solid financial foundation takes time and patience, not shortcuts.
