Let me preface this by saying that I'm not a fan of cash gifts, or even gift certificates. I think both are a bit of a cop-out. But I'm actually liking the idea of donating directly to someone's savings or investment efforts, and there are new ways to do that all the time. They're great for teenagers, recent college graduates, or anyone, really, who is working towards a savings goal. And while you're still giving cash, it's more about offering up a little piece of financial security, and in this economic environment, most people can't get enough of that.
Here are a few of the best options:
- SmartyPig. If you know someone who is saving through SmartyPig (it's that cutesy site that helps people save toward their goals, but it has one of the highest interest rates you'll find these days at 1.75%), you can give them a gift certificate that they can then deposit into their account. Cards are available for $25, $50, $100 and $500 if you send by mail, or between $10 and $500 if you deliver the card via an email notification. The cards are also available for people who don't yet have an account – say your sister, who is constantly trying to save for a vacation, but never quite gets there. This could give her the kick start she needs.
- U.S. Treasury Savings Bonds. These seem old school, but now you can buy them electronically if you have a TreasuryDirect account (or you sign up for one -- it's fairly straightforward). Your account will have a "Gift Box" section that allows you to buy savings bonds and transfer them to the recipient. If you're giving to someone 18 or older, he can set up a TreasuryDirect account and receive the bond directly. If he's under 18, his parent or guardian will have to set up an account and add a minor linked account for the bond. In either case, you'll need a full name, Social Security number, and TreasuryDirect account number. TreasuryDirect.com offers printable gift certificates so there's something to unwrap on Christmas morning.
If this all seems a little too complicated, you can still buy a paper bond at most local banks. You'll fill out a purchase application and pay, and the bond will be mailed. At this point in the game, you should have it mailed directly to the recipient, because it can take three weeks to process.
- GoalMine. This is a service that lets you invest in a mutual fund for $25 -- good for saving for your longer-term goals, but also good for helping others do the same. You can purchase what's called a "GoalPack," essentially an investing gift card, and the recipient can use it to invest. The cards come in $25, $50, $100 and $200, and there are some fees: There's a $1 flat fee per withdrawal, and if you take the money out before six months, there's a 2% charge. There are also standard investing fees of around 1%. GoalMine account holders also have to be at least 18.
- Contribute to a 529 plan. Many 529 plans, which are opened by parents to save for their kids' college education, accept third-party contributions. The how-tos vary by plan, but in general, you can fill out a contribution form or send a check with the account number of the plan you want to contribute to, and that's that (or, to make things even easier, give the parents the money and ask them to deposit it in the account). For specific questions, though, you should contact the plan directly.