These days, it’s perfectly OK to give your loved ones gift certificates for the holidays.

At least, that’s what I read the other day. And I have noticed plastic gift cards displayed by the cash registers everywhere I’ve been this week –Best Buy, The Home Depot, Toys ‘R’ Us — even a restaurant I ate at a few nights ago.

I’m all for it. Sure, we should all spend weeks searching for the perfect gifts — or, better yet, making them. But cash or cash equivalents have always had a big place in holiday gift-giving.

Gift certificates, however, won’t do if you have big goals — to transfer sizable sums to, say, your grandchildren, or to start training young recipients in handling finances.

Pay for education

If you have really big ambitions, such as helping to pay for a grandchild’s college education, consider one of the tax-free opportunities. This year, you can give up to $11,000 to each of an unlimited number of people without having to pay gift tax, and the gift is tax-free to the recipient. A couple can give $22,000.

The Coverdell Eduction Savings Account, formerly known as the Education IRA, allows each child to receive as much as $2,000 per year (from all contributors combined). Withdrawals are tax-free if used for elementary, secondary or higher education.

As with ordinary IRAs, Coverdells allow you to invest in just about any stock, bond or mutual fund you want. But the giver must fall below certain income limits — a modified adjusted gross income of $110,000 for individuals, $220,000 for couples filing joint returns.

Any fund company, bank or brokerage can provide details on calculating MAGI and setting up an account.

Also take a look at Section 529 college savings plans sponsored by the states. These also allow tax-free withdrawals, though only for higher education. And anyone can contribute, regardless of income. Many plans permit contributions in excess of $100,000, though you still must abide by that $11,000 limit to avoid gift tax.

Many states offer two choices, and you can invest in one or both. The “prepaid tuition” type allows you to pay for college credit hours at today’s prices, protecting you from future tuition increases. The “savings” or “investment” type offers a range of stock and bond mutual funds. Many start with stock investments for young children and gradually shift to bonds to keep money safe as children approach college age.

For information on these, buy the book “The Best Way to Save for College” by Joseph F. Hurley, (800) 400-9113, or look at his Web site, www.savingforcollege.com. Also try the site of the National Association of State Treasurers at www.collegesavings.org.

Because Coverdells and 529 plans allow tax-free investment growth (a rule that took effect this year) they are much better for sizable college savings than the old standby, the custodial account set up under the Uniform Transfers to Minors Act.

Custodial accounts do offer a tax benefit, since investment earnings are generally taxed at the child’s rate, which is usually lower than the tax rate for parents or grandparents. But that can’t beat the tax-free treatment of the other plans.

Also, the child gains control of the custodial account upon turning 18 or 21, depending on the state. With Coverdells, too, assets belong to the beneficiary. But with 529 plans, the giver retains control and can, in fact, revoke the gift at any time or shift it to another beneficiary.

Educate children

What if your goal is not so much to make a big gift as to start teaching a child about finances?

In that case, you can use a custodial account at a brokerage, bank or fund company to buy stocks, bonds or mutual funds for the child. An adult would have to control the account.

Many financial services firms have lower minimum requirements for custodial accounts than they do for ordinary accounts, especially if you agree to make regular contributions.

To find funds with low minimums, try the search tool at the site of the Mutual Fund Education Alliance at www.mfea.com.

And if you’d like to buy just a share or two, try the online system at Sharebuilder, www.sharebuilder.com/sharebuilder/index.asp. There’s no account minimum and commissions can be as low as $4 per transaction.

For several years, I’ve suggested that people who want to teach children about investing simply create blocks of pretend shares in real companies such as McDonald’s and Nike. The grown-ups would then serve as the children’s brokers and bankers. You could put real money into the account. This approach would save the brokerage fees, taxes and other hassles of giving real shares, and it should be just as educational.

I still think this idea (of mine) is inspired. But since not a single reader has ever reported trying it, I’ve demoted it from the start of this annual gift-giving column to here at the bottom. This is its last chance.