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Children's Savings

cyfan92

cyfan92

Well-Known Member
Sep 20, 2011
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Augusta National Golf Club
We have a very young child and are planning on having more. We are very fortunate to have good incomes, live well below those incomes and can in turn save for the future.

My question is there any tools out there, outside of fully funding a 529 to let money grow more than 0.1% in a money market account? No where close to having enough for trust funds..
 
Brokerage account, Roth IRA if you aren’t already doing one and eligible, CD’s and online savings accounts pay more than MM accounts.
 
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Best, pretty much risk free investment would be to take the kid's savings and paydown your mortgage. Say your kid had a $1K, then make a $1K principle pymt on your mortgage. If your mortgage is at 2.5% then your kid will earn at 2.5% compounded monthly...and it's after income tax.
 
Open a free UTMA account at TD Ameritrade or similar and pick a good ETF or mutual fund to set up an automatic transfer to contribute to monthly. You will get dollar cost averaging and you will be surprised how it adds up over the years.
 
You can fund a 529 as much as you want, right? Just can only deduct so much, and then you'd be hosed if the kid didn't want to become a doctor.
 
cyfan92 said:
We have a very young child and are planning on having more. We are very fortunate to have good incomes, live well below those incomes and can in turn save for the future.

My question is there any tools out there, outside of fully funding a 529 to let money grow more than 0.1% in a money market account? No where close to having enough for trust funds..
Click to expand...

I'm not a real savvy investor, so ignore me, but I would open an account with someone like Edward Jones and keep adding to it every pay period. From what I've been able to determine, there is no minimum investment requirement with Edward Jones anyway, so you could start it off with 50 bucks if you wanted to. I've been extremely happy with my investment account. I have not put it in high risk, high reward investments, but rather have an income producing, lower risk portfolio. But you could go with a higher risk for a young child. Older people need to go with lower risk because there aren't that many years left for them to recoup their losses, if any. I don't pay attention to my investment, other than opening the monthly statements at the beginning of each month to see how much I've lost or gained. It's been nothing but gain in the past several months, however, and my plan has gained $7,500 in the past three months alone.
 
State Savings Bank used to offer 5% on a kids account up to $1,500, so we did exactly that amount for each one of our kids. Anything over $1,500 it goes back down to 0.01% or some low percentage, so we put rest of their money elsewhere.
 
When my kids were young, I worked for Ford and they had a program that allowed you to buy EE bonds. I would purchase bonds automatically with each paycheck. The bonds had to be in your name and list the child as the beneficiary. The bonds could then be used tax free for college. 25-50 bucks a week added up quickly.

There are likely better investment options, but I think the real success will come in having a given amount of money automatically set aside into a special account on a regular frequency.
 
cyfan92 said:
We have a very young child and are planning on having more. We are very fortunate to have good incomes, live well below those incomes and can in turn save for the future.

My question is there any tools out there, outside of fully funding a 529 to let money grow more than 0.1% in a money market account? No where close to having enough for trust funds..
Click to expand...
Find a local investment advisor that you can trust and verify his or her reputation.

Buy some ETFs or mutual funds that have moderate risk and invest for the long haul.
 
Just open custodial accounts on your online broker. I have ones for my kids on TD Ameritrade. It’s nice, they earn money or spend it, and I just transfer it in and out instantly. Just have them invested in a few different vanguard ETFs VT, VYM, VTI and VUG.
 
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MWB76 said:
Best, pretty much risk free investment would be to take the kid's savings and paydown your mortgage. Say your kid had a $1K, then make a $1K principle pymt on your mortgage. If your mortgage is at 2.5% then your kid will earn at 2.5% compounded monthly...and it's after income tax.
Click to expand...
I don’t think you understand how compounding works.
 
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