Money always a welcome holiday gift, with some caveats

NEW YORK — It won’t have the “wow” factor of an iPhone, but a Roth IRA or other money-minded gift may have more sizzle than you think this holiday season.

There are, nevertheless, some rules to keep in mind when bestowing such presents — like making sure they don’t come off as judgmental or a homework assignment in disguise.

“Don’t make it boring or worse — a chore,” said Sheryl Garrett, president of the Garrett Planning Network of certified financial planners, based in Shawnee Mission, Kan.

Ideally, recipients will have recently expressed a desire to get their finances in order. That will let you reference their comments in a card so they know what motivated the gift.

Here are some ideas to help spread the wealth this holiday season.

Meet with financial planner

If cash seems tacky, consider paying for a meeting with a financial planner. This gives the recipient the flexibility to choose how to use the time, whether it’s for a portfolio tuneup or to map out a savings plan.

A session can cost several hundred dollars or more, so consider pooling resources with friends or family. Ask the planner if he or she offers gift certificates so you have something tangible to give.

Savings bond or CD

As old-fashioned as they seem, savings bonds and CDs are good starting points for teaching kids about investing.

For teens or older recipients, a more unusual approach is setting up a savings account at SmartyPig.com. The site lets people save for a specific goal, whether it’s a flat-screen TV or trip to Hawaii.

Goals can be made public on the site, as well as through widgets on Facebook, MySpace or blogs, so individuals can enlist friends and relatives to contribute. Accounts are FDIC-insured and come with a 3.9 percent interest rate. Because savings goals are serious, withdrawals aren’t permitted but accounts can be closed at any time without penalty.

Brokerage account

With all that’s going on in the stock market, another way to help kids get up the learning curve is to set up a custodial brokerage account.

As with any financial gifts for kids, be sure to confer with parents first. In this case, you may have to because you’ll need personal information, including the child’s Social Security number, said Alyce Zollman, financial consultant at Charles Schwab.

At Schwab, there are no fees for opening an account with as little as $100.

You would have control over a custodial account, but the child could track its performance online. The beneficiary becomes the account holder at age 21 in most states.

Roth IRA

A good option for young people who are just entering the work force is a Roth IRA, said Rob Seltzer, a certified public accountant in Beverly Hills, Calif.

A Roth IRA may be preferable gift to a traditional IRA because withdrawals of contributions (not earnings) are generally tax and penalty free. As with brokerage accounts, you’ll need personal information for the beneficiary if you’re opening a custodial account. Beneficiaries also need to earn a paycheck to be eligible.

529 Plan

Another option is contributing to a 529 college savings plan, which offers significant tax breaks for educational expenses. If you want to ensure your gift is put toward college, make the check out to the plan.

Grandparents can open an account under their own name to maintain control of the funds.

Another way to ensure the money goes into a 529 plan is to send a gift through FreshmanFund.com, which charges a 5 percent fee to facilitate donations to 529 plans.

If recipients don’t have a 529 plan set up yet, the site holds the money until they do.

A simpler route is to write a check to the parents and offer to help them pick a plan. One resource is SavingforCollege.com, which tracks the performance of 529 plans across the country.

Personal finance books

Gracefully giving a personal finance book can be tricky.

“You may think you’re doing someone a huge favor. But it can easily be taken the wrong way,” said Garrett of the Garrett Planning Network.

One way to avoid offending someone is to give a gift card to Amazon.com or Barnes & Noble instead. At some point soon before the holidays, mention the title and how much you enjoyed it. This leaves the decision up to the recipient.