Green being one of the colors of the season, don't neglect it as a Christmas gift. Sure, the kids want robot cars and talking dolls -- at least, right now. But when they're 18 and have put away childish things, they'll take a fresh view of money gifts given when they were young. Here are some ideas: U.S. Savings Bonds -- a great low-cost present. For as little as $25, you get a guaranteed investment whose earnings will rise if inflation does.
Today's Series EE bonds pay a minimum of 6 percent annually if held for five years. But the actual yield changes every six months, depending on the general level of Treasury rates. Since Nov. 1, Savings Bonds have been earning at an annual rate of 7.17 percent. If rates like these persist, EE bonds will yield more than 6 percent.
They're available, at no fee, through your bank or S&L.
Silver coins -- a gift of precious metal that's cheaper than gold.
With silver trading at around $6.70 an ounce last week, New York's Manfra, Tordella & Brookes was selling single one-ounce American Eagle silver dollars at around $10. If you bought several, you'd pay $8.10 to $8.40 each. Other coin dealers might charge a little more or a little less.
Don't let yourself be hoodwinked on price! Some telephone and mail-order companies -- banking on your ignorance -- gouge you for three or four times what the coin is worth.
Gift certificates -- for recipients who need something so specific that only they can choose. You can often send a check to their favorite store; the store will then mail them a gift certificate. Or, you can visit the store and charge the certificate to your credit card. There's no fee for the service.
Alternatively, try one of the new American Express Gift Cheques, generally available wherever the company's travelers checks are sold. The minimum denomination is $25. Gift checks should be usable at any store that accepts travelers checks. You pay $2.50 per check, regardless of its size.
Zero coupon Treasury bonds -- a good grandchild present. You pay a fraction of the bond's face value; the child redeems it at maturity. A $1,000 zero at Merrill Lynch, due in 2005, carried a net yield, after commissions, of 9.5 percent last week and cost $186.
Prices vary greatly, depending on the broker's commission, the bonds in inventory and public demand. For example, at the discount broker Charles Schwab, a $1,000 zero due in 2005 yielded 9.4 percent last week and cost $197.10 -- more than you'd pay at Merrill Lynch. (Schwab's minimum order is for bonds whose face value comes to $5,000; Merrill Lynch takes $1,000.)
Schwab's $1,000 zero due in 2014 cost $94.20 and yielded 9.05 percent. The yield is lower than on shorter-term bonds because longer bonds are in greater demand, according to Schwab trader Andrew Epstein. But at that price, they're a poorer buy.
Two warnings: One, taxable interest accrues in the zero every year, even though the money isn't paid -- or the value realized -- until the bond is sold or redeemed. So these gifts are best for a child who owes no income taxes. Two, the child might take a loss if the bond has to be sold early. So match the maturity to the time when the money will be needed -- for example, when the child enters college.
Shares in a mutual fund -- for a bet on long-term growth. It doesn't pay to buy just a few shares of stock, because the brokerage commission is so high. Instead, choose a no-load (no-sales-charge), stock-owning mutual fund. A few -- including the Twentieth Century Investors group in Kansas City -- will accept any amount of money. Most others require that you open an account with at least $250 to $1,000.
When you buy securities for a minor, do it through a custodial arrangement like the Uniform Gifts to Minors Act.
A college certificate of deposit -- sold by the College Savings Bank in Princeton, N.J. The current yield on these CDs is low: around 5.4 percent on a minimum investment of $1,000. But the bank gives its own guarantee that your CD will buy a specified percentage of the child's future cost of college, no matter what happens to inflation between now and then. For a child entering a private college in 2012, for example, your $1,000 is guaranteed to pay one-eighteenth of the average cost. (This pricing can change every month.)
Cash -- folded and tied with a big red bow. I always thought red went well with green.