How to Invest Money For Your Kids

How to Invest Money For Your Kids

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[charliethomlin]

My dad started an account for me when I was a baby (not sure what type). Then when I was 12 and got my first job, he taught me how to invest. Now I'm 15 and I do it on my own :)

[marksweetser]

Opened an UTMA with Vanguard for my daughter last year at 7. All in VTI. She has about 5k in there already😊

[MattAlsaker]

Did a 529 for our son when he was born until we hit a set dollar amount, then just let it grow. At age 12 he had some money saved up and wanted to learn about investing. We did UTMA and matched dollar for dollar. At age 16 he had earned income. Based on certain behavior and education requirements he had to meet, we contributed to a ROTH for him. I didn't get my first dollar in the market until I was 20...and I was broke. He's going to be so far ahead of me.

[myrtlebeachsara]

Definitely interested in this for my kids

[Mekias]

What if your child wants to take out the contributions in their Roth for frivolous purchases? Do you tell them you won't match their contributions any more?

[lukeony]

What about opening an index fund/mutual fund in the parent’s name for college cost/future home/etc. saving for your child. My wife and I opened a low cost index fund for our first born, plan to open a 529 for second child. Are there significant tax saving or other benefits that I’m not aware of (upon fund maturity) by opening a custodial account? We plan on comparing our two kids funds after a period of time to see how returns compare, but I don’t understand enough about personal finance to know whether we made the right decisions to go our chosen route verses opening something like an UGMA account. My wife had one of those & she felt like she had a bad experience when having those funds transferred to her name (due to taxes owed) upon TOD.

[A_page_a_day]

Ok, before you think someone is trolling you hear me out. And on Dave's side being critical isn't trolling. We can only grow with a critical eye of what we believe. You minimizing his view does not strengthen yours.

I believe that there are many ways to invest for kids and pros and cons to each and a complicated Roth IRA is only one.

I have a Roth IRA for one of my kids and UTMA for my other kids. We had 529 plans for all three, but found that the fees were not worth the cost or the rules at the time. The UTMA is taxed but with little in there we did not need to claim it on taxes.

Ok, that being said very few people cover this topic and I am glad that you did. Thank you for the great continued content!

[serjiang]

In Canada, there is RESP, (registered education savings plan). The federal government matches 20% of your contributions up to $500 each calendar year. Growth is taxed on the child when he or she eventually uses it to pay for post secondary education. My daughter is 14 months old and has $7, 000 in her RESP already. $5, 000 from me, $1, 000 from government and $1, 000 in growth.

[AridiumInsane]

I have been researching this and it will allow you to help build multi generational wealth.

[salsanacho]

Yeah, too many people open checking accounts for their kids, where their money just sits there. I plop my kid's xmas/bday money in an after-tax Fidelity account. It's still in my name, so I don't have to deal with a separate tax return for them. But it's a separate account that we can monitor together to see how much it grows. We just plop it all into FXAIX.

[jonathandelauter]

Correct me if I’m wrong, but IF you have access to a farm where a child can “work” or contribute they can open a Roth IRA where they can start contributing at that early of an age. I want to say around 5 or 7 y/o?

Could you please confirm or provide a way for folks to take advantage of this possibility? Learned this at one my Financial Advisor luncheons (when I was with Raymond James - broker/dealer) by either Blackrock or Fidelity, one of those decently sized fund companies.

[darrencarter]

How are you guys getting $1M starting with $1544 down with a new born with 10% annual return? I'm getting $757, 132.40 each time and that's a flat 10% return all 65 years.

[Nodnarb]

We contribute to a 529 for our son. Can we put this into a ROTH when hes older?

[jenniferleigh]

Is Vanguard or Fidelity better? My son is 8. As a single mom, and not knowing what the future holds I want to be able to save for his future..which one is better? I wouldn't be able to put too much in to start but want to save something

[franzvanjulio]

How about using the 529 plan? College costs, assuming a 4 year degree at an in-state university, around $200k+. What if we over find that and my son can take the money and do whatever he wants, assuming, of course, he’ll pay taxes on it. Perhaps we don’t know how much he’ll be taxes and maybe it’ll go to waste or will have to be used for someone else, like his kids? If that were the case I can see how the Roth IRA would be the best option.

[kalenl]

Why not create jobs for your kids like baby sitting and lawn mowing and be considered earned income to invest in Roth? When is the parent allowed to match it? Does the “employer” need to file payment as an expense on their taxes for IRS to accept payment to “employee” as earned income? 🤔

[hello_Tam_here]

Can I open UTMA for my grandchildren while their parents have accounts for them too?

[roguedog]

Anyone else having issues accessing the resources? I go to the page but doesn't seem like I can download anything

[ladev]

Why not just put the money in mutual funds or index funds?

[jmac]

Correct me if I'm wrong but younger kids can have a Roth IRA without a real job if you make a spreadsheet and pay them for doing chores around the house.