Saving and Investment Gifts for the Next Generation

December 15, 2023
Looking for a gift with the potential to keep on giving? Learn more about saving and investment gifts like stock shares and tuition contributions.

As the holidays approach, we all face the same conundrum: what to get the young people in our lives. While many givers fall back on cash or gift cards, they may be missing out on presents of potentially more lasting value.

"Personally, I love giving my nieces and nephews investment-based gifts because they spark invaluable conversations around financial literacy and often are more meaningful in the long run," says Susan Hirshman, director of wealth management at Schwab Wealth Advisory, Inc.

Here are five gifts to consider this season:

1. Stock shares

"It's never too early to teach kids about the market and compound growth," Susan says. "Consider gifting them a stake in a company that makes something they know and value, such as their favorite gaming console or TV show. You can even periodically review the stock's performance together to help determine why the price performed the way it did.

Learn about opening a Schwab One® Custodial Account at You can purchase whole shares of any stock, or fractional shares of S&P 500® companies for as little as $5 with Schwab Stock Slices™ (

2. College savings contributions

Contributing to a child's 529 plan is one way to help make sky-high college costs more manageable. "The younger they are when you contribute to their 529, the longer the account has to potentially benefit from compound growth," Susan says. Plus, many states offer income tax credits or deductions for contributions to a 529 plan. In 2023, individuals can contribute up to $17,000 per year and couples up to $34,000 per year without eating into their lifetime gift and estate tax exemption ($12.92 million for individuals and $25.84 million for married couples in 2023). However, if you want to supercharge a 529's growth potential, you can bundle five years' worth of gifts into a single year, as long as you treat those gifts as occurring over five successive tax years.

Learn about Schwab's 529 Education Savings Plan at—and calculate the potential tax advantage of your 529 contributions at

3. Tuition payments

For college-age kids, you can make tuition payments directly to the school. "A bonus is that direct tuition payments are exempt from the gift tax, which may not be the case with 529 contributions beyond the annual gift tax exclusion," says Chris Kawashima, CFP®, a senior research analyst at the Schwab Center for Financial Research.

4. Roth IRA contributions

For the working teens and young adults in your life, helping them establish and then fund a Roth IRA is a great way to invest in their future. "Roth IRAs are among the most valuable assets you can own, because earnings have the potential to compound tax-free throughout your lifetime and withdrawals are tax-free in retirement, assuming you're at least 59½ and have held the account for five or more years," Chris says. "Just be aware that your total contributions cannot exceed the recipient's earned income for the year."

See Schwab's custodial IRA options at

5. Matching savings

"Not every financial gift has to be what you might consider 'practical,'" Susan says. "Maybe your granddaughter is saving up for a new computer or concert tickets. By offering to match her savings, you're helping her understand the value of establishing a savings goal and the satisfaction of reaching it."

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Before investing, carefully consider the plan's investment objectives, risks, charges, and expenses. This information and more about the plans can be found in the Schwab 529 Education Savings Plan Guide and Participation Agreement available from Charles Schwab & Co., Inc., and should be read carefully before investing.

The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.

All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed.

Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.

Schwab Stock Slices is not intended to be investment advice or a recommendation of any stock. Investing in stocks can be volatile and involves risk, including loss of principal. Consider your individual circumstances prior to investing.

Investors should consider, before investing, whether the investor's or designated beneficiary's home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available in such state's qualified tuition program.

The "S&P 500® Index" is a product of S&P Dow Jones Indices LLC or its affiliates ("SPDJI"), and has been licensed for use by Charles Schwab & Co., Inc. ("CS&Co."). Standard & Poor's® and S&P® are registered trademarks of Standard & Poor's Financial Services LLC ("S&P"); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC ("Dow Jones"). Schwab Stock Slices is not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, or their respective affiliates, and none of such parties make any representation regarding the advisability of using Schwab Stock Slices or investing in any security available through Schwab Stock Slices, nor do they have any liability for any errors, omissions, or interruptions of the S&P 500 Index. 

Schwab Wealth Advisory™ ("SWA") is a non‐discretionary investment advisory program sponsored by Charles Schwab & Co., Inc. ("Schwab"). Schwab Wealth Advisory, Inc. ("SWAI") is a Registered Investment Adviser and provides portfolio management for the SWA program. Schwab and SWAI are affiliates and are subsidiaries of The Charles Schwab Corporation.