Q: For a wedding gift, I would like to provide my daughter and her fiance with a nest egg of about $10,000. They are both 30, college-educated, with modest combined earnings of about $50,000. They have no debt and plan to have children in about three years. They are responsible about money, but have no investment experience. What form would you recommend the nest egg take? CDs? A seeded mutual fund investment account? Other? -- Antoinette, Davis
A: Gifting a $10,000 nest egg to your daughter and her fiance as a wedding present is a great idea. Not only does it give them a jump start on savings, but it also provides an opportunity for some financial education.
If they need the funds to help buy a home in the near future, or build their emergency fund, the money should be held in a safe, liquid savings account, money market account or CDs.
Money slated for retirement should be invested in no-load, low-cost mutual funds or exchange-traded funds (ETFs) that track the main indexes, e.g., S&P 500 (large companies), Russell 2000 (small companies), MSCI EAFE (international companies) & the Barclays Capital Aggregate (bonds).
In addition to the $10,000, you might want to sweeten the gift by adding a subscription to Money magazine or Kiplinger's Personal Finance magazine. These magazines are great resources for learning about investing and managing personal finances.