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Consider financial gifts
on Valentine’s Day

It's almost Valentine's Day. This year, in addition to giving traditional presents, why not add a gift that can last long after the flowers fade, the candy is eaten and the cards are recycled? Specifically, why not give something that can help the recipients' financial future?

Let's consider a few possibilities:

» Stocks: People enjoy receiving shares of stock in a company whose products they use. However, before rushing out to purchase some Company XYZ stock, make sure it's really a good fit for whomever is on the receiving end. In other words, if you know they will lose sleep over temporary market downturns, don't give them shares in a volatile stock.

If you're giving away some of your own shares, you'll need to know what you originally paid for the stock (its "tax basis"), how long you've held the stock and the fair market value of the stock at the date of the gift. You'll also need to determine if you have to file a gift tax return. (You can give up to $11,000 per year, free of gift taxes, to as many people as you want.) Recipients of your gift will need this information to determine gains or losses they decide to sell the stock.

» Zero-coupon bonds: These types of bonds can make an excellent gift if you know that your intended recipient would like to achieve a specific financial goal -- such as a new car, a dream vacation, etc. -- in a given number of years. You buy a zero-coupon bond at a deep discount; when the bond matures, you -- or in this case, the recipient of your gift -- collects the full face value. You can find zero-coupon bonds issued by the U.S. Treasury (called STRIPS), corporations, or a municipality. Make sure you ask about the tax considerations, interest rate and default risks of the specific issuer when considering these investments.

» IRA contributions: If you want to give a loved one a financial gift that can help ensure a comfortable retirement, consider contributing to his or her IRA. Individuals can put in up to $4,000 annually to either a "traditional" IRA, which offers tax-deferred earnings, or a Roth IRA, whose earnings grow tax-free, provided certain conditions are met. And IRA owners who are 50 or over can put in an extra $500 a year as a "catch-up" contribution.

» Life insurance: At first glance, few things sound less suitable for a Valentine's Day gift than life insurance. Yet, if you're thinking of a gift for a spouse or your children, you can hardly do better than to make sure your life insurance is sufficient and up-to-date. Do you have enough life insurance -- and the right type of insurance -- to meet your family's needs should anything happen to you? Keep in mind that major life events, like a new marriage, home, baby and retirement, can affect your insurance requirements. Think about using Valentine's Day as a launching pad from which you'll periodically review your life insurance needs. You may want to work with a financial professional to evaluate your situation and to recommend appropriate solutions.

It's true that none of these ideas are exactly typical Valentine's Day gifts -- but, in their way, each one has a lot of "heart." And your generosity will be appreciated for years to come.