Buying an investment item as a gift? Do your research first

Do your research when buying an investment item as a gift, planners say
Buying an investment item as a gift this holiday? Bars of bold, silver or platinum are a far more liquid investment, but not everyone wants to receive one as a gift. AP File Photo

TORONTO – Many Canadians will wake up to a tower of presents on Christmas morning, but those looking to give a memorable gift that will conjure up fond memories for years should disregard the trendy items topping wish lists this holiday season.

Take it from Ryan Geddes, a 33-year-old online marketing specialist from Burlington, Ont. who bought his father a single share of Twitter for Christmas.

“He spends all of his time on Twitter trying to promote his short stories,” said Geddes, who purchased the share through an online service that also provides a framed stock certificate.

As a shareholder, Geddes’ father will receive the company’s annual and quarterly reports, allowing him to keep track of how his favourite company is doing.

“It’s kind of like a magazine subscription,” said Geddes, as its value continues over time.

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Buying gifts that double as investments can be a unique and thoughtful way to avoid disposable trinkets over the holidays. Gifts such as artwork, gold or vintage goods could retain, or even gain, value over time.

However, financial planners say it’s prudent to do your research before you purchase an investment as a gift.

A memento from a ball game could be suitable gift for a baseball fanatic and could also prove to be a worthwhile investment says Darren Coleman, senior vice-president at Raymond James.

But the buyer would have to know enough about the sport to be able to distinguish a valuable memento from a questionable one, says Coleman.

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“If it’s one of Derek Jeter’s game balls where he hit a home run in a World Series, that probably has more value than one that he fouled off into right field,” says Coleman, referring to the former Yankees captain.

The buyer may also need to ensure that the item comes with a certificate of authenticity so that it can be resold in the future.

A vintage guitar or bottle of champagne could serve as a thoughtful gift for a music or a wine aficionado, but experts caution that specialty items may not be the soundest investments.

“They are in a very specific investment category that generally does not have a market to turn them back around into cash, or to leverage money out of them,” says Mark Halpern, a certified financial planner and the president of life insurance firm

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“The market is small. So when someone needs money quickly, they might not be able to access that money, or it might not be the best time to access it.”

Bars of bold, silver or platinum are a far more liquid investment, but not everyone wants to receive one as a gift, says Coleman. In the long term, a bar of gold is likely to appreciate in value, but in the short term, fluctuations in the market could reduce its worth.

Howard Kabot, vice-president of financial planning at RBC Wealth Management Services, says buying a child a share of a company they are interested in, such as Disney or Hasbro, could serve as a valuable lesson in investing.

“Make sure the gift matches the interests of the person receiving it,” says Kabot.

However, planners say some of the most financially responsible gifts are not necessarily the most exciting.

“There are plenty of gifts to put under the tree that may not be as glamorous but at least come with guarantees,” says Halpern.

He recommends contributing to a child’s Registered Education Savings Plan or purchasing life or critical illness insurance for a family member.

Emily Lyons, the Toronto-based CEO of Femme Fatale Media, is planning on making an investment in her fiancee’s dentistry business for Christmas.

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Lyons has hired a designer to build her a fiancee a website as a holiday gift.

“He doesn’t really realize what he’s missing out on without having social media or a web presence,” says Lyons.

She also plans to pay for the site’s search engine optimization, which will likely bring him new business for years to come.

“It’s going to generate him a profit forever,” she says.

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