Leave a legacy of thrift, personal responsibility, and planning for the future with your loved ones through the benefits of tax-free gifting.
Under current IRS rules, you can gift up to $13,000 tax-free, in 2009 to anyone you choose...children, grandchildren, nieces or nephews, or any special person. Gifting has merit for a variety of reasons:
You can feel secure that your loved ones needs - educational or other - are taken care of
Lessen your estate tax bill, taxed currently at 45%, but may be 55% in January 2011
Take advantage of compound interest, which Einstein deemed "The Eighth Wonder of the World"
Over the long term, U.S. stocks have delivered a compounded annual return of 9%.* Although nothing in today's world is guaranteed, you can use the classic Rule of 72 to estimate the number of years it will take to double an investment at a given rate of return. Using 9% as an example, a single one-time maximum gift of $13,000 will double in 8 years to $26,000 (72 / 9 = 8).
Alternatively, you can contribute a lower amount each year. With an annual gift of $1,000 for 24 years at a 9% rate of return, the newborn would potentially have nearly $84,000 at age 24. The key is to get started now and stick to the plan, in good markets or bad.
* Source: Political Calculation 2006
The Rule of 72 is a mathematical concept and is not illustrative of any Heartland investment. The examples generated are hypothetical and are for illustrative purposes only. It does not guarantee or predict how an investment will perform. It is an approximation of the effect of given rates of return and assumes a long-term investment horizon of greater than 20 years. It is important to keep in mind that most investments, including mutual funds, do not grow at a steady rate and the Rule of 72 should only be used as a guide in setting long-term investment goals.
This is intended for general information only. The Heartland funds do not offer tax advice. Please refer specific questions to a tax professional.
Past performance does not guarantee future results.