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This holiday season, put a Roth IRA under the tree

Published December 17, 2006


Tired of giving presents that get returned, gift cards that get lost or forgotten and cash that gets spent in the twinkling of an eye?

Some of that may be inevitable during the holiday season, but there are alternatives. You could use some of your resources to improve the financial well being of those you love.

Here are my top three suggestions for money gifts at the holidays or any time of year:

- Open a Roth IRA for a child or adult with earned income. Pensions are disappearing, but most young workers aren't motivated to save for retirement on their own. Each year you can contribute as much as $4,000 or 100 percent of earned income, whichever is less. Adults who have low incomes and are not full-time students may even be able to use this contribution to claim the retirement savings credit on their income tax returns. Where to go: I recommend a total stock market index fund, available from mutual fund companies Vanguard, T. Rowe Price or Fidelity, or as an exchange-traded fund through any broker.

- Help someone save for a financial goal, be it a bicycle, car, college, a down payment on a house or something else. You agree to match the person's savings at whatever rate you think is appropriate. It could be $1 for $1, or you could put in 50 cents or perhaps $3 for every $1 the person saves. Where to go: If you have Internet access, consider a high-yield money market account such as, www. or. www.igo If you are not online, ask about savings options at your bank or credit union.

- Set up a college savings plan. If you can commit the money to purchase a contract and the child lives in Florida, you can cover tuition costs through the Florida Prepaid College Plan. Otherwise, look for another low-cost 529 savings plan. Where to go: Check out Florida's plans or call toll-free 1-800-552-4723 and consider other plans such as those managed by Vanguard and TIAA-CREF. (More information:

The beauty of accounts like these is that once they are established, others can contribute, too. Keep in mind that an adult will need to serve as trustee for financial accounts owned by children younger than 18.

Don't want to give money? Here are a few lower-cost ideas, available from bookstores except where noted:

- Personal Finance for Dummies, 5th Edition by Eric Tyson ($21.99, Wiley) There's a reason this book is in its fifth edition: It's a well-organized, practical guide to the world of personal finance.

- The Bogleheads' Guide to Investing by Taylor Larrimore and others ($24.95, Wiley). A good choice for people interested in learning how to invest wisely and keep their portfolios balanced.

- All Your Worth: The Ultimate Lifetime Money Plan by Elizabeth Warren and Amelia Warren Tyagi ($14, Free Press). Readable advice from a mother and daughter, aimed at people who are struggling financially.

- KidsWealth Money Kit ($39.95) contains materials to help you teach your kids money management. Made by a Tampa company. Where to go: or call (813) 472-8600.

- Starting Out by Sheryl Garrett ($15.95, Dearborn Trade Publishing). One of a series of guidebooks, this one is aimed at young people who are or soon will be living on their own.

- Nolo ( publishes outstanding books for those who want more detailed information on topics such as bankruptcy, credit repair, divorce, real estate and wills.

Helen Huntley writes about investing and markets for the Times. If you have a question about investments or personal finance, write or Helen Huntley, Times, P.O. Box 1121, St. Petersburg, FL 33731. Read more questions and answers at




[Last modified December 19, 2006, 17:32:11]

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