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With the holiday shopping season in full swing, you might be busily hunting for gifts that are both affordable and practical. So today I wanted to share three ideas that I think make great gifts for that special someone in your life, whether a friend or grandchild.
Investment Gift Idea #1: A Share of Your Favorite Dividend-Paying Stock
In my opinion, there’s nothing like giving someone the gift of financial independence. And as you know, I consider dividend-paying stocks the surest path to that goal.
That’s never been truer than it is today, with share prices of some of the country’s best companies available at fire-sale prices. I’ve been telling you about some of them right here in recent Money and Markets issues.
For example, I profiled McDonald’s just a few weeks ago. Since that day, the shares have risen about 9.5%. And the company’s latest same-store sales results, released yesterday, were stellar yet again.
So the real problem isn’t finding good stocks to buy. It’s the logistics — while a single share of stock might be good for your budget, it isn’t always economical to buy in terms of commissions. Plus, how would you go about getting it registered in the proper name?
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Good news: Plenty of websites specialize in this kind of thing — they’ll even send a nicely mounted stock certificate right to the person’s home.
That’s a great, tangible way to get somebody interested in investing! Heck, I can still remember getting my first paper stock certificate from Disney. As a kid, it was a real thrill to see — and hold — my ownership stake, especially when it was colorfully decorated with Disney’s famous characters.
Three popular sites for gifting stock are www.giveashare.com, www.oneshare.com, and www.giftsofstock.com. I don’t have any personal experience using any of them, but they might be good places to start.
Investment Gift Idea #2: A Savings Bond from the U.S. Treasury
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| I Bonds look cool, and offer great protection against future inflation. |
Savings bonds, especially the inflation-protected variety (I bonds), are another great option. They don’t quite foster the same level of excitement as a stock certificate, but they are nice investments that can be held for long periods of time.
You’re probably familiar with the usual EE savings bonds. But let me give you a quick rundown on I Bonds.
They’re Federal savings bonds that pay both a set rate of interest plus another yield that fluctuates with the Consumer Price Index (CPI-U). The Treasury uses a formula to come up with the final rate, which gets set every November 1 and May 1.
As I’ve pointed out before, the CPI is not an accurate gauge of inflation. But it will pick up at least some of the effect of rising prices for basic consumer goods.
In terms of taxes, your earnings from I Bonds are exempt at the state and local levels, plus you don’t have to pay Uncle Sam until you redeem the bonds or they reach maturity, whichever comes first.
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I Bonds are not marketable securities, meaning they can’t be bought or sold on secondary exchanges. But they will earn interest for up to 30 years. You can’t redeem them until a year has passed, and, if you cash out before you’ve held them for five years, you’ll pay a penalty of three months’ interest.
I Bonds can be purchased either electronically in amounts of $25 or more, or in seven different paper denominations ranging from $50 to $5,000.
While deflation is the bigger threat right now, I expect inflation will re-emerge as the biggest long-term hurdle for investors. So now might be the perfect time to give these bonds as a gift.
To buy savings bonds online, or for more information, visit the government’s official website, www.treasurydirect.gov. Alternatively, you can buy paper bonds from your local financial institution.
Investment Gift Idea #3: A Great Investment Book
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| Liar’s Poker is both informative and hilarious. |
Lastly, there’s always the option of a great investing book. I don’t care if the person is just starting out or a seasoned trader, they can always learn something from a good book. And books make great stocking stuffers, too!
There are far too many titles to cover in this space. But I heartily recommend two classic texts by Benjamin Graham — The Intelligent Investor and Security Analysis. Graham is considered the father of value investing, and he was Warren Buffett’s mentor at Columbia Business School. These books are well suited to any investor, no matter what the level of experience.
Another wildly popular title — for good reason — is Extraordinary Popular Delusions and the Madness of Crowds by Charles Mackay. It’s a very fun read, with stories about historical bubbles, including tulip mania. If you want to understand herd mentalities, especially as they relate to markets, this book is terrific. As the last decade has shown us, bubbles do happen … this to me helps put them into perspective.
And for a very entertaining look at Wall Street, I still love Liar’s Poker by Michael Lewis. It’s a fast, light-hearted story that offers great insight into the way greed and Wall Street intersect. If that isn’t an appropriate subject for the end of 2008, I don’t know what is!
Best wishes,
Nilus
P.S. Don’t think I forgot about getting you something for the holidays! Click here to see what very special investment gift I’d like to give you this holiday season.
About Money and Markets
For more information and archived issues, visit http://legacy.weissinc.com
Money and Markets (MaM) is published by Weiss Research, Inc. and written by Martin D. Weiss along with Tony Sagami, Nilus Mattive, Sean Brodrick, Larry Edelson, Michael Larson and Jack Crooks. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in MaM, nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in MaM are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical in as much as we do not track the actual prices investors pay or receive. Regular contributors and staff include Kristen Adams, Andrea Baumwald, John Burke, Amber Dakar, Michelle Johncke, Dinesh Kalera, Red Morgan, Maryellen Murphy, Jennifer Newman-Amos, Adam Shafer, Julie Trudeau and Leslie Underwood.
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