10 things to watch out for when Giving financial gifts

PUBLISHED : Sunday, 22 December, 2002, 12:00am
UPDATED : Sunday, 22 December, 2002, 12:00am

Money, money, money: While cash in a red lai see envelope may not be personal, it always has a use. But there are other options if you want something that will outlast the seasonal hype.

Vouchers: Consider a gift voucher. The recipient can choose their own gift at leisure or supplement the amount to buy something larger.

Bank accounts: For a child, consider opening a bank account. Large banks charge an annual fee if the account is below a certain threshold, as well as transaction costs, so check out smaller lenders for better deals.

Long-lasting: A first account with an initial deposit can be used to channel incoming cash from various sources in years ahead - ranging from future gifts to pocket money.

Shares: Blue chips can mean a significant outlay as shares sell in board lots, meaning many retail buyers can only afford small caps or penny stocks. For example, the minimum purchase of shares in HSBC - a traditional gift - will set you back just under HK$35,000 for a lot of 400 shares based on the present share price of about HK$87. Research the firm and its long-term fundamentals.

Monthly options: Ask your bank or fund house about buying shares or mutual funds via regular instalments. This option makes bigger companies accessible to retail punters and takes the guesswork out of choosing the right time to buy.

To a good cause: You may choose to extend your largesse beyond friends and family by donating to charity.

Hidden benefits: Charitable donations in excess of HK$1,000 are tax deductible. Keep your receipt and include it in your annual tax return. For bigger donations, take financial advice to ensure you make your gift in the right financial year to maximise the tax advantages.

Trusts: Money set aside in trusts may be passed on to relatives, offspring or even charitable concerns. Such gifts are administered by trustees and made accessible to recipients when and how the donor decides. There are also clear tax and estate planning advantages.

Prepare the way: If you are going to give cash or shares to a child that is not your own, it is best to consult its parents. Financial planning lessons should start early.

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