Giving Investments to Kids

Options For Giving Investments to Children

Investments are the gifts that truly keep on giving. They grow over time so your gift can have more impact, and they can also help teach financial skills to the recipient. If you are looking for a way to give an investment as a gift, here are several to consider.


If you are looking to make a gift to your adult children, there are advantages to giving them stocks if you own some that are valued much higher than when you purchased them.

“Your kids can then either keep or sell the stock,” according to Forbes Contributor Lynn Ballou. “When they do sell it, they’ll pay taxes on the gain based on the amount you paid for it (what’s known as your basis). And if they’re in a lower tax bracket than you are at the time, this will be a win-win strategy, resulting in your family keeping more of the profit by paying less in taxes on the stock sale.”

529 plans

One great way to help a child build his or her college savings is to open a 529 plan, which is a tax-deferred savings plan. Each plan offers different benefits, and you don’t have to purchase the plan created by the state you live in, so shop around.

Many plans give a tax break or provide a matching program to account holders. It is important to note, however, that you most likely will not be able to get a state tax break unless you are using your own state’s 529 plan. Regardless of whether you qualify for state tax breaks the federal government doesn’t tax the funds if they are used in the designated ways at qualifying educational institutions.

“Most 529 plans also offer the equivalent of a target-date fund: age-based portfolios that are well-diversified among stocks, bonds and cash and that become more conservative as the child gets older and closer to the first tuition payment,” said Kathy Kristof of Kiplinger Financial.


Ugifts were created by state governments to function as part of 529 college savings plans. The purpose of Ugifts is to make it easier for people to make small, one-time contributions to 529 plans. In order to make a Ugift, the giver only needs to have a special code, which he or she receives from the account holder.

This means that the account holder, typically one of the parents of the child who will use the funds, does not have to give out other sensitive information, such as the account number or the Social Security number of the child. Using these codes allows a variety of people to make gifts into a 529 plan without risking important information leaking to the public and creating risk for identity theft.

The code can be used online to easily transfer money from the giver’s bank account into the 529 plan. There are contribution limits, however, which vary depending on the plan. After the transaction is done, the giver can download a gift card that he or she can print and give or email to the recipient, making a Ugift perfect for birthdays or holidays.

Published by  Cumberland County Federal Credit Union

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Disclaimer – All content contained in this announcement is for informational purposes only and should not be relied upon to make any financial, accounting, tax, legal or other related decisions. Each person must consider his or her objectives, risk tolerances and level of comfort when making financial decisions and should consult a competent professional advisor prior to making any such decisions. Any opinions expressed through the content in this announcement are the opinions of the particular author only.

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