GOLDEN VALLEY, Minn. - It's graduation season; and that means ceremonies, parties, and gifts.
The National Retail federation says one-third of all consumers are expected to give a graduation gift this year. Americans are expected to spend $5.6 billion overall, with more than half of those grad gifts in the form of cash.
There are ways to make sure your graduation gift lasts, even beyond college! Financial advisor Dan Ament, with Morgan Stanley in Wayzata, joined us on KARE 11 Sunrise with these suggestions:
Fund a Roth IRA
Your investment grows tax-free for retirement and contributions amounts, if needed, can with withdrawn at any time without penalty. Your eligibility is based on filing status and income level. Keep in mind, the maximum contribution is $5,500 (or $6,500 for those over age 50).
Give Shares of Stock or Investment Fund
Since you are likely in a higher tax bracket than a new grad, consider giving shares of an appreciated investment you hold as your gift. Typically, young graduates will be in a lower tax bracket and when sold, their capital gain will be taxed at a lower rate. The gift of an investment may also spark their interest in saving more in the future as well.
Student loan payments or help with a bill
Consider offering to help with a payment towards the new grad's student loans. The payment you make will reduce their principal balance and help avoid additional interest costs in the future. Gift cards such as GiftofCollege.com can be redeemed directly into a student loan account. If you know that a new grad is facing specific bills that are a burden, consider assisting them with one of their financial gaps like health or auto insurance or their rent payment.
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