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Graduation gifts that keep giving after the ceremony -- Page 2

Books don't grow on trees
Textbooks add hundreds of dollars to a student's bill every year. A gift certificate in any amount for the campus bookstore lessens this heavy higher-education load.

Welcome to the real world
Tucked among all those high school graduation announcements, you might find one or two from students finishing up college. These grads, faced with the looming closure of the Bank of Mom and Dad and a job hunt ahead, have a lean and hungry look. Now is the time to give gifts that will grow.

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When Matt Kelton graduated with a degree in English literature from Texas Christian University, his parents offered him a choice: Help with law school tuition or a ColorTyme Rent-to-Own franchise fee. After much soul searching, he took the franchise fee and opened a store with the idea that he'd make enough to pay for law school. Four years later, he owned two stores, which he sold for enough to buy a franchise he liked better.

Seventeen years later, he's president of Computer Renaissance, a national retail franchise firm that buys, sells and trades new and refurbished computers. Law school is the last thing on his mind. Would he give his own two children the same gift?

"It was good for me. I learned a lot about running a business and selling. But if you don't work hard enough, you can really lose everything," he says. "It depends on the kid."

Not equipped to help a new college grad in a business startup venture? Then consider these less life-changing, but equally welcome, college-grad gift possibilities.

It's a time-honored college graduation gift. Whether the vehicle's new or used, it will be appreciated. You don't have to foot the full auto cost. Offering to make the first year's worth of payments or paying for insurance coverage is a gift that will help a new workforce member get on his or her feet.

Zero coupon bonds
For students bound for graduate school, a zero-coupon bond that matures as tuition comes due will help ensure that the student can make the payment. "Most people are consumed with school and don't have time to monitor more sophisticated investments," says Tirrell Paxton, an attorney and CPA, who worked his way through University of Michigan Law School. "That's why zeros are good."

A $3,000 contribution to a Roth individual retirement account, where earnings grow tax-free, can produce a tidy sum if left untouched until the student is ready for the rocking chair. Paxton recommends investing the gift in an indexed mutual fund because index funds are lower risk and don't require a lot of investor maintenance.

Not sure a retirement account really conveys your heartfelt congratulatory sentiments? Then consider this: If that three grand earns 8 percent a year, it will be worth about $100,000 by the time the student exits the work force at age 67. Now, that's a heck of a gift.

Jennie L. Phipps is a contributing editor based in Michigan.

-- Posted: May 10, 2004


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