The Perfect “Financial” Christmas Gift

The older we get the less “stuff” we get for Christmas.  As kids our Christmases were often filled with various toys and gadgets.  However, once you reach your 20’s you tend to want bigger items such as iPads, new cell phones and money.

I gifted unto my sister this year what I consider to be the perfect financial gift.  It was a check worth $200.  Now most of the time when we get a check for Christmas or our birthday we think of what we could possibly buy with that money.  This check was different.  I wrote out the check, but I did not date or sign the check.  The check is currently worthless.  Under the “For” spot on the bottom left part of the check I wrote: “Roth IRA”.  The check was given unto my sister with the stipulation that it be used as funds to go towards her opening a Roth IRA.  When she decides to gather up another $800, she will have $1,000 to put towards a low-cost index fund through Vanguard, and I will sign and date the check.  This Roth IRA money will aid in her retirement goals many years down the road.

I would like to think that this gift can one day make her a MILLIONAIRE, and it can.  If she were to open an account with the $1,000 needed and put in the maximum contribution allowed to a Roth IRA, given an 8% annual return on her investment.  She would have an account balance of well over $1 million dollars by the time she is just 60!!!

Maybe you received some money for Christmas or a recent birthday.  My challenge to you is instead on spending it frivolously on the latest iPad or TV, open yourself a Roth IRA.  Vanguard offers low-cost mutual funds that can be started with as little as $1,000.  Be diligent and stay the course, you could turn some Christmas cash into a million dollars!

Budget Smart, Invest Wise

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