“A good man leaves an inheritance to his children’s children, but the wealth of the sinner is stored up for the righteous.” — Proverbs 13:22 (NKJV)
That proverb speaks to the importance of looking beyond what exists now and setting up a foundation for one’s legacy generations into the future.
The legacy includes one’s spiritual character, faith, and principles. But it also includes passing on wisdom, practicality, and knowledge. That’s why it’s wise to think carefully and intentionally about financial gifts for grandkids.
They may not realize it when playing with them, but children have used toys and games to simulate what they expect to do as adults. While a game of Monopoly might teach them something about money and real estate (though not necessarily ethics), a real financial instrument that they own can teach them real lessons that leave lifelong impressions.
As Proverbs 22:6 advises, “Train up a child in the way he should go; even when he is old, he will not depart from it.” Here are four ideas for financial gifts for grandkids that could accomplish just that.
Roth IRA
Teenage grandchildren may already have experience in the workforce. If they’ve ever worked and received a W-2, they’re eligible for a Roth IRA. Starting one in their name now can set them up for a lifetime of financial responsibility.
Contributions to a Roth IRA are made with after-tax dollars. However, the money grows tax-free over time, including investment earnings, dividends, interest, and capital gains. When your grandchild retires, distributions they’ll take from the fund are entirely tax-free.
If your grandchild is still a minor, you’ll have to open a custodial Roth IRA. The fund is overseen by a trusted outside custodian, and when your grandchild matures, they assume control from the custodian.
Starting early with a Roth IRA—especially since many don’t start until they’re well into their careers—can be one of the most valuable financial gifts for grandkids.
Stock Shares in a Kid-Friendly Company
It’s never been easier for everyday investors to own stock shares—especially children. A creative way to teach them about investments is giving them shares in a company that reflects children’s interests—Disney, Hasbro, Mattel, Nintendo, and Roblox are a few that spring to mind.
Stock shares teach them about the hallmarks of free enterprise—profits, dividends, price movements, growth and expansion, and more. They may also instill the virtue of patience while monitoring all the factors that affect stock prices. When the stock represents something they’re interested in or care about, grandkids are more likely to pay attention.
Start a 529 Savings Plan
A 529 savings plan is a tax-advantaged way to save up for future educational expenses. With regular contributions, plan profits are tax-deferred. When the child withdraws from the account for qualified educational expenses, the debits are tax-free.
Some U.S. states offer a variety of 529 plans with different investment strategies. You can make a one-time payment or set up automatic monthly contributions. A 529 plan is an especially effective vehicle for easing the high cost of future education, making it one of the most valuable financial gifts for grandkids.
Open a Custodial Investment Account
Roth IRA and 529 savings plans don’t fit every investor’s priorities. But you can apply the custodial model to any kind of investment account—stocks, ETFs, alternative investments, real estate, and more.
You can use the most basic indices like the S&P 500 or NASDAQ 100 to illustrate market fluctuation, compound growth, diversification, and other principles of the stock market. Anyone can contribute to a custodial account, though it’s essential to understand its tax implications.
Financial Gifts for Grandkids That Reflect Your Values
EagleFlight Wealth Management gives financial advice from a Christian perspective. If you’re looking for financial gifts for grandkids that reflect your convictions and set them up for future well-being, we’ll find the right vehicle for building wealth responsibly. Learn more when you contact us.
To get in touch to schedule an introductory meeting, call (765) 288-1927 or email barry.hickey@cfdinvestments.com.
About Barry
Barry Hickey is the founder, managing partner, and financial advisor at EagleFlight Wealth Management, a financial services firm based in Muncie, Indiana, helping people live and retire with dignity and financial peace by planning their financial future with a biblical worldview. Barry has been in the financial services field since the mid-1980s. In 2006, inspired by Isaiah 40:31 (“They that wait upon the Lord shall renew their strength; they shall mount up with wings as eagles; they shall run, and not be weary.”), Barry became an independent financial advisor and founded EagleFlight with the mission to help people plan for their financial future and find financial peace, and to fulfill the mission God gave him.
Born and raised in Muncie, Barry graduated from Muncie Southside and served in the Marine Corps during the Vietnam War. He holds a Series 6, 7, 63, and 66 securities licenses and the Indiana Life and Health Insurance License. He also holds the Accredited Asset Management Specialist℠, Chartered Retirement Planning Counselor℠, Certified Kingdom Advisor®, and Retirement Income Certified Professional® designations.
Outside of work, Barry enjoys reading, watching football and baseball, and spending time with his wife (Carla), children (Kristin, Ryan, and Lauren), and grandchildren (Emmi, Cate, Ben, Maddie, Sophia, Bella, and Brady). His favorite Scripture is Matthew 6:33, “But seek first his kingdom and his righteousness, and all these things will be given to you as well.” To learn more about Barry, connect with him on LinkedIn.
Advisory Services offered through Creative Financial Designs, Inc., a Registered Investment Adviser. Securities offered through CFD Investments, Inc., a Registered Broker/Dealer, Member FINRA & SIPC, 2704 S. Goyer Rd., Kokomo, IN 46902. 765-453-9600. EagleFlight Wealth Management is not an affiliate of Creative Financial Designs, Inc. or CFD Investments, Inc.