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I buy nieces and nephews savings bonds - but the drawback is you can't do it until the child has a social (at least as far as I know and how I've done it).
I also buy my niece and nephews bonds for every birthday. They will remember them and appreciate it far more when they're starving college students than the latest fad toy or pair of jeans when they were younger. I also put $5 per bi-weekly pay per child into a bond for when they graduate high school as a grad gift.
The problem with the bonds is that they need to be in someone's name and SSN. You can put them in your name and SSN, but you'd want to list the child as the co-owner or they won't be able to cash them. If the name has been decided on and won't change, you're in good shape (you don't need their SSN on the bond - they'll provide that when the cash them), but if not, you might be best to wait, or find a small-up-front investment mutual fund to start in then transfer?
People have baby showers so they can get others to pay for the things that they will need in the short term to take care of the baby(crib, clothes, diapers, etc.) A savings bond doesn't really help out very much in this respect. Also, it's difficult(if not impossible) to gift a savings bond to someone who doesn't have a name yet.
A savings bond is more appropriate for a baby's christening or birthday party. It's a great gift to ensure that the money is actually being saved for the baby's future...in case you think that the relatives would just spend whatever cash you gave to the baby on starbucks/luxry crap for themselves
lilstudfromNYC said:I searched the forums and didn't find any relevant threads, so please don't flame me.
One of our good friends is having a babyshower, and I was thinking of gifting them long term bonds. I want to know if
1. Is it a good idea? Any other better ideas for 20+ year investments for a baby? 2. Have any of you done it before? How?
Thanks,
My father has bought my daughters $50 bonds here and there. The gesture is nice but it's just a hassle for me as I'll need to keep them filed away and then understand what to do in order to redeem them when the time comes.
lonestarguy said:You can buy them gold or silver one ounce bars. Pretty to look at, hard to loose and tangable.
I have to second this idea.
Bonds are great gifts but, not appropriate for a baby shower. If the parents are young or if they have multiple children, then they are probably strapped for cash. The gold or silver is easy to manage, no name or SSN needed and can be cashed should the emergency arises. It is better than liquid cash because the gold takes that extra step of going to a broker to get the value for the gold than plain cash would take.
On the other hand, you could just give them a pre-paid visa card and track where they spend the money; starbucks or babies r'us.
Horrible buy right now. Look at the yields, bonds are in a bubble right now, near dotbomb levels. Look at federal receipts vs federal expenditures for the next decade. When monetized treasuries come home to roost the bond value will be halved.
If only gov't savings bonds didn't suck so much these days, they'd be a reasonable choice and can be given in very modest sizes ($25-50 min). Last I check both EE and I bonds are pretty bad deals, so I'm not sure what a better alternative would be. You can give shares of stock I suppose, but going through certificates is a big pain all around.
I remember when I went off to college, my parents gave me some EE bonds that had been bought for me by relatives (my grandmother) for birthdays, etc. I was psyched to see the face value of them (Oh boy, mad H&B and possibly makin' it rain), but disappointed to find that the actual value was much less (One fat H & Very watered Down B and no rain to speak of). I guess a large portion of them were purchased in the years directly leading up to college, not in the beginning.
If the parents or grandparents are establishing a 529 plan, a contribution to that might be a better gift option for a newborn.
Fine in theory but it is not appropriate to bring a gift of bonds or cash/other investments to a shower. Showers are for stuff not investments. Give the kid a onesie and then the bond in honor of its birth.
I have a bunch of neices and nephews, godchildren, etc., and am a parent myself, so I've looked at this issue every which way. First of all, it is a gift. By definition, gifts should be given with no strings attached. Hopefully the parents will take those cash gifts and use them wisely, but if they don't, that isn't your problem. You might just ask the parents if they have plans to set up a 529 or other investment vehicle for the kid because you would like to help them out with a contribution to be used for his education. If they say no, maybe offer to help them out with the research. This is especially helpful if they are new parents and you have information that they might not have already condidered themselves.
Savings bonds are horrible investments right now and can be a real PITA if not registered correctly. Don't create a hassle for somebody.
If you are talking about a niece or nephew or godchild - someone who's life you plan on being a part of for a long time - you might just accumulate a little investment on the side for the kid (even telling the parents that you are doing it). Won't they be surprised some day when you can pay for a semester of college for them or help them buy their first car?
Keep in mind that you cannot have EE bonds issued in the child's name if you intend the bond be used for education. These bonds are tax deferred, but only are tax free in parent's name.
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