Kids and investing

[Fatsquatch]

Definitely off topic for the forum but …

Does anyone have investment accounts specifically for their minor kids? I believe they’re called custodial accounts. If so, who is it through?

I’m not looking to do anything crazy but I’d like to take my kiddo’s financial literacy a step beyond the basics of balancing a checkbook and carrying debt on a credit card is bad. My thought is I will give each of my kiddos $100 and then help them pick companies/brands they know to buy stock in. I’m sure this will end up being toy companies like Mattel or maybe McDonald’s or something. I don’t necessarily care what it ends up being. I just want to teach them some basics around investing.

Anyone have any thoughts or advice? Any success stories or horror stories are more than welcome.

 

[Admin]

 

[Vondy]

You should be able to setup an UGMA account with whomever under your name and childs. I'd recommend just doing a good growth and income mutual fund or index fund. Best thing is if you can teach them to start early and just keep adding consistently. I think we all wished we would have sacrificed a little more in our early years to put more away.

We set up an UGMA account with growth and income mutual fund when each of our kids was born and automatically had $50 a month put into it until they graduated high school. Putting 10k in over that timeframe and he has 31k. I told him it was only for school or investment, maybe house down payment. Daughter is on track for the same. A little goes a long way if you start early.

 

[GovtMule]

No advice, but its an excellent idea.

 

[Ragnar406]

Fidelity does a custodial account, If you are already investing I would look at who you are investing with. 529's are more appealing now that they can roll over some amount into a Roth IRA if they do not end up using it for school.

I started with my son telling him i would match any amount he put in his account.. ( separate from the 529). It has not worked out like i hoped it would unless i remind him when he received birthday and Christmas money.

I also purchased the Psychology of Money and told him i would pay him after he read it... he is part way through but need more encouragement. Highly recommend that book.

 

[WagginTail]

Definitely off topic for the forum but …

Does anyone have investment accounts specifically for their minor kids? I believe they’re called custodial accounts. If so, who is it through?

I’m not looking to do anything crazy but I’d like to take my kiddo’s financial literacy a step beyond the basics of balancing a checkbook and carrying debt on a credit card is bad. My thought is I will give each of my kiddos $100 and then help them pick companies/brands they know to buy stock in. I’m sure this will end up being toy companies like Mattel or maybe McDonald’s or something. I don’t necessarily care what it ends up being. I just want to teach them some basics around investing.

Anyone have any thoughts or advice? Any success stories or horror stories are more than welcome.

Good topic. My wife and I put $100 each a month into a savings account for our son. It's just a regular savings account through our credit union. I know we probably should put it into something different but I'm not sure what is the best option.

 

[Vondy]

Good topic. My wife and I put $100 each a month into a savings account for our son. It's just a regular savings account through our credit union. I know we probably should put it into something different but I'm not sure what is the best option.

Yes, Please get it out of the bank. Any mutual fund or index fund would be overwhelmingly better. Ugma or 529 designation on account.

 

[Fatsquatch]

You should be able to setup an UGMA account with whomever under your name and childs. I'd recommend just doing a good growth and income mutual fund or index fund. Best thing is if you can teach them to start early and just keep adding consistently. I think we all wished we would have sacrificed a little more in our early years to put more away.

We set up an UGMA account with growth and income mutual fund when each of our kids was born and automatically had $50 a month put into it until they graduated high school. Putting 10k in over that timeframe and he has 31k. I told him it was only for school or investment, maybe house down payment. Daughter is on track for the same. A little goes a long way if you start early.

Appreciate your insight. Definitely the type of thing I’m looking into.

 

[Fatsquatch]

Fidelity does a custodial account, If you are already investing I would look at who you are investing with. 529's are more appealing now that they can roll over some amount into a Roth IRA if they do not end up using it for school.

I started with my son telling him i would match any amount he put in his account.. ( separate from the 529). It has not worked out like i hoped it would unless i remind him when he received birthday and Christmas money.

I also purchased the Psychology of Money and told him i would pay him after he read it... he is part way through but need more encouragement. Highly recommend that book.

Appreciate the feedback. I’ll check into the book. I’ve done 401K’s since my first job at 18 but always limited to the employer plan options. I haven’t really done anything outside of that until recently. I’m liking the wide open options available to me through my own personal brokerage account though. Of course the tax advantages of a 401K/IRA and the employer matches had to be taken advantage of first.

Teaching the kiddos more than what I was taught is certainly the goal for this adventure though.

 

[Cobber4082]

excellent idea, schwab or fidelity both offer ugma not sure about robinhood. I personally use robinhood and its simple and intuitive. I imagine the others are similar. Best investment line I have overall has been Pacer Cash Cows ETF. Bogleheads is a forum to check out -may have good ideas regarding your intent.

 

[Ragnar406]

Appreciate the feedback. I’ll check into the book. I’ve done 401K’s since my first job at 18 but always limited to the employer plan options. I haven’t really done anything outside of that until recently. I’m liking the wide open options available to me through my own personal brokerage account though. Of course the tax advantages of a 401K/IRA and the employer matches had to be taken advantage of first.

Teaching the kiddos more than what I was taught is certainly the goal for this adventure though.

Yea, a lot of our discussion ( and this is covered in the psychology of money book) is that appearances are not indicative of reality.

It is also neat to get feedback on the things they want to invest in... something they are ahead of the curve..

 

[trigger]

What about a 401k and you left the employer? No contributions being made anymore. Let it sit or move it somewhere else?

 

[Todd627]

What about a 401k and you left the employer? No contributions being made anymore. Let it sit or move it somewhere else?

Move it to either your new 401K or IRA.

 

[trigger]

Move it to either your new 401K or IRA.

Do you have to keep it in the IRA for a certain amount of time? Does it still earn?

 

[Todd627]

Do you have to keep it in the IRA for a certain amount of time? Does it still earn?

Keeps earning. You can start withdrawing at 59 1/2 without penalty. 10% penalty if you withdraw before then.

 

[trigger]

Keeps earning. You can start withdrawing at 59 1/2 without penalty. 10% penalty if you withdraw before then.

Is it based on the stock market as well? I just hate 401K's, when the market crashes, there goes all your money.

 

[JenElio]

Is it based on the stock market as well? I just hate 401K's, when the market crashes, there goes all your money.

Yup, basically same thing except you're the only one that contributes $$...

 

[trigger]

Yup, basically same thing except you're the only one that contributes $$...

So I could still lose everything? 🤦‍♂️

 

[Fatsquatch]

Is it based on the stock market as well? I just hate 401K's, when the market crashes, there goes all your money.

IRA’s and 401K’s are both based on stocks/bonds/etc. Company 401k plans generally have pretty limited choices. IRA’s usually have far more and far broader options. They’re all investments and include risk. The ups and downs are to be expected. The closer you get to retirement the more conservative your choices should get. Target date funds do that for you if you check into them.

 

[906UP]

What about a 401k and you left the employer? No contributions being made anymore. Let it sit or move it somewhere else?

Depends on the plan & former company. I have one w Fidelity that remains in the 401k but can't add to or rollover into it, it doesn't have to be moved but Fidelity also handles the pension for said company so it makes sense. I had another with Fidelity but when I left that company I was required to roll it to another or transfer it to an IRA.

 

[Fatsquatch]

So I could still lose everything? 🤦‍♂️

Technically yes but everyone else will too sooo 🤷🏻‍♂️