Show of hands: Who doesn't like getting cash for the holidays?
That's what I thought.
So explain to me exactly what you were doing in the Wal-Mart (NYSE: WMT ) parking lot at 5:30 a.m. Friday morning, when you could have picked up the perfect holiday gift at the drive-through ATM on your way home from work Wednesday night?
Maybe opening an envelope to ogle a check from Grandma doesn't exactly scream Kodak moment. But it's a much prettier picture than the one of you glaring at the Visa bill that bears your holiday spending tab.
Even more important, by the time that credit card bill rolls around, are your giftees still wearing, ingesting, playing, or soaping up with whatever it was that you lovingly selected and flung in your shopping cart so you could get home before the next episode of Lost started?
Yeah, that's what I thought.
The holidays are supposed to be different -- filled with little luxuries we can't justify buying for ourselves and others when we're picking up dryer sheets, new socks, and organic turkey bacon. They're supposed to be meaningful, filled with lasting memories, and if you're lucky, pretty easy to wrap.
How does the gift of a green future sound? True, cash (and cash equivalents) may not have a lot of "under-tree appeal," but when the sugar-cookie high wears off, a thoughtful financial present will bring smiles for many holidays to come. (So as not to completely dispense with the seasonal glee, go ahead and get that giant stuffed panda to hold the card.)
With that in mind, here are a few suggestions for money-minded holiday gifts.
Cold hard cash
The average American will spend $740 on holiday cheer this year. Think about it: That's nearly one-fifth of a fully funded IRA for 2005.
Last week I deigned to suggest that cash-strapped households consider canceling Christmas. (Evidently, such lunacy won't fly in many readers' households.) But allow me to borrow the math from that story to illustrate what a single gift of $738.11 in cash (and certain investments) given in the year 2000 would amount to today:
- Had you put the money in a five-year certificate of deposit (ING's were at 4.85% in 2000), your gift recipient would have $935.33, as well as the memory of that pumpkin pie you made from scratch because you weren't exhausted from your ninth trip to the mall.
- While your nephew was clearly excited about the prospects of owning a chunk of "the stock market," with shares in an S&P 500 index mutual fund, unfortunately this holiday season he's out $13.33. His sister fared a tad better with the Vanguard Total Stock Market Index Fund she got in her stocking. Her account is up to $779.57. Index mutual funds haven't had such a good five-year run. But no one still blames you for buying them BetaMax instead of VHS for Christmas back in the day.
- Good move avoiding the parking lot pileup at Target
(NYSE:TGT)and buying the company's stock for Aunt Minnie instead. Her year 2000 holiday take is now worth $1,439.16.
- And while your son may have pouted about being denied the PlayStation, his shares of Best Buy
(NYSE:BBY)-- five years later worth $2,295.21 -- are a lot more impressive to prom dates than a beat-up heap of unloved electronics.
If you aren't sure what investment to put on your gift list, write a check and wrap it up with a classic investment book (like anything by Peter Lynch or The Intelligent Investor by Benjamin Graham (here's my co-worker's book report)) -- the beginning of any investor's toolbox.
A money makeover
This is not the little blue box that will send her squealing with glee. This is not the power tool that will rev up his heart. (Or vice versa, depending upon your adherence to holiday gender stereotypes.) But with a little creative storytelling, financial software can convey your everlasting love and commitment to the recipient's peace of mind in a way that a gift receipt never can.
Well, I gave it a shot. The truth is that Quicken Personal Finance 2006 or Microsoft Money 2006 as a gift may be like pairing broccoli and chocolate. But as long as you keep the fiber in your diet, a few sweets now and then won't kill you.
If you've ever wondered exactly where your paycheck goes, how you stand in terms of retirement, or what it will take to buy a vacation home or send Junior to a decent school, financial planning software has the answers. These programs -- or even a few dates with a fee-only financial planner -- could be the very thing to turn your family's finances around the coming year. And how sweet would that be? (Plus, the boxes are pretty easy to wrap.)
Present it as a makeover -- a money makeover. Include with it a half-day at the spa or three lessons with the local golf pro. Either that, or volunteer to balance the checkbook for the rest of the year. Nothing says "I love you" like the willingness to pace for hours and tear your hair out trying to track down a 37-cent discrepancy.
Stocks for kids
I don't want to be the lady who ruined Christmas for some kid. So if you already got the Xbox 360, please don't return it -- or try to pawn it for double on eBay (Nasdaq: EBAY ) . (My Microsoft-shareholding co-workers would pout for days.)
But for the price of an Xbox 360, you could buy about 10 shares of Microsoft (Nasdaq: MSFT ) stock. Talk about the gift that keeps on giving. In the past 10 years the stock has quadrupled. (Here's how to buy stocks for kids.)
Stocks for kids? You bet. Kids have the one thing that adult investors long for -- time. (That and dewy, unblemished skin. So make that two things adult investors covet.) If you can get your little Mini-Me interested in investing at a young age, the holiday gifts she gets you when her portfolio's all grown up will be totally sweet.
Speaking of sweets, some of the best investments over the past 50 years have been candy companies. Stocks like Tootsie Roll (NYSE: TR ) , Wrigley (NYSE: WWY ) , and Hershey (NYSE: HSY ) have returned averages between 14% and 16% annually.
In this case you might not want to pair the gift of stock with the actual product, unless you choose sugar-free. You wouldn't want to remember holiday 2005 as the beginning of that monster orthodontia bill.
More holiday Foolishness:
- 4 Stock(ing) Stuffers
- Merry Dot-Com Christmas Stocks
- Good Morning, Cyber Monday
- Cancel Christmas
- Black Friday's Big Deals
Dayana Yochimonce spent Black Friday in Macy's. The one in New York City. She has the battle scars to prove it. She owns none of the companies mentioned in this article, nor did she purchase anything in that store that fateful day.