How to Invest or Save Gifts You Receive
Most people will receive gifts throughout their lives on various occasions, whether it be for birthdays, holidays, weddings or otherwise. In many cases, these gifts will come in the form of money, bonds or even gift cards, all of which can be far too easy to spend without thought. But what if you could invest financial gifts instead of using them up as soon as you get them? It’s something you may not have considered in the past, but the benefits are impossible to ignore.
So, how can you save or invest gifts that you receive? Here are a few tried and true methods that can help lead to a sound financial future.
Purchase a Savings Bond
One of the most effective ways to invest a gift of cash is to turn it into a savings bond. U.S. savings bonds usually take seven or more years to mature, which makes them ideal for investing money that you don’t need to have access to for a while. Bonds are purchased at half value, which means a bond that will eventually mature to $200 costs $100 to purchase. They come along with very little risk as opposed to many other forms of investments, making them ideal for beginner investors.
Invest Those Gift Cards
Are you sitting on a pile of prepaid debit cards that have been received over the years as gifts? You may want to consider investing them in a mutual fund. Mutual funds can be invested in for as little as $25, and you can sell or exchange your gift cards through a website such as CardCash or GiftCardGranny, both of which will typically give you 85-90% of a card’s value.
Divert Gift Money to an IRA
If your primary goal in investing gift money is to put it away for as far into the future as possible, you may want to consider diverting it to an IRA. An IRA account allows you to contribute regularly to a retirement fund that will earn you additional money through interest over the years. One of the major benefits of opening an IRA is that you can expect to receive tax benefits on your investments, which can make a big difference if you’re investing a sizable sum of gift money. If you already have an IRA in place, this is likely the best option for investing financial gifts.
Open a CD
Looking to have access to your invested money sooner than retirement age? A certificate of deposit (CD) is a very suitable option for investing your gifted money. These typically require you to leave the money untouched in an account for a period of time that can last from several months up to five years. In many cases, it’s possible to accrue 5% interest on a CD investment in a one-year time period, which makes this an attractive option for those looking for a fast return on investment.
Don’t just sit on financial gifts you’ve received over the years—invest them! In the end, you’ll thank yourself for taking the responsible route.