Investment fund for the grandkids???

[TXHunt]

My first grand baby turns 1 next month and I’d like to set him up with some kind of savings or investment fund for the future. I’m going to call my investment guy tomorrow to see what he says but thought I would see what you guys are doing.

I’m thinking maybe something he can’t touch till he’s 30. My grandmother got me a US savings bond when I was born and it matured when I was 18….18 year olds are stupid and I don’t even remember what I spent it on. 21 year olds are also pretty stupid. I’m thinking by 30 he will make a better decision on what to do with the money.

 

[mlevimadden]

UTMA accounts are a good one to look into, but the maturity dates vary by state, so I'd check that before opening one.

Edited to add: I think 30 is a little late for a maturation target. Not that you asked, but in my opinion 25 would be a good target when a lot of people are trying to buy a first house, and have been out of college for a few years where a large sum of money could really help their financial footing.

 

[westslopelaker]

Setup a 529 college fund and add a contribution.

 

[tt_johnsclist]

Yep 529 then they have it when they need it and it’s gets spent on something important. We opened one for each of our kids when they were born and invested modestly in them. Grandma and grandpa would also contribute a little a Christmas etc. and we added a few bigger chunks over the years when we could. Just sent my first to college and she is 3/4 funded already.

 

[Marble]

The type of account can vary, but what it's invested in matters more to me.

If it was me and I wanted to have control of it while I was alive and then set a date for when they could access it, I make it part of my trust with an age they could access it at.

I would choose a mutal fund designed for growth and let it ride. A $5,000 investment today would be a huge sum in 25 years.

Sent from my SM-S918U using Tapatalk

 

[Ucsdryder]

I have 529 accounts set up for my kids. I also talked to my investment guy about setting up a separate nest egg account for them and he suggested setting up an account that is owned by me and controlled by me but earmarked for them. Anything with their name on it, they get access to when they turn a certain age. I want to say it was 18. So I have investment accounts that are for them, but their names aren’t on them. If one of them decides to grew up to be an asshole then they can’t have it.

 

[knale87]

My wife and I opened up brokerage accounts for our three kids a few years ago. They’re in our names and we’ll give them the money when we see fit. We contribute a little here and there when we can and then anytime they get cash for birthdays or whatever it goes into their account. At the same time we did this is when we opened one for ourselves so I’m relatively green when it comes to stuff like this so I don’t know if this is the best option, but so far it seems to working out pretty good.

 

[406flyfish]

529..

 

[mtnbiker208]

The college fund for kids is awesome, until they decide not to go to college,
then what?

 

[Wheels]

We did equal investments in a 529 and in an energy stock when our son was born. The 529 has grown about 250% in 18 years and the energy stock has grown 900%. Granted we will have to pay taxes on the stock, but I’m not a big fan of the returns on a 529 plan.

 

[Wheels]

The college fund for kids is awesome, until they decide not to go to college,
then what?

Just gave to pay taxes upon withdrawal.

 

[TXHunt]

Thanks for the advice thus far. Not interested in a college fun I’m wanting this to be a whatever they want/need when a little older. I like the idea of just opening another investment fund earmarked for them and give them access when they are older.

 

[stonewall]

Just gave to pay taxes upon withdrawal.

@mtnbiker208
Can roll unused 529 money to a Roth IRA now. With certain rules around it

 

[The Ri Guy]

Yep, just set up a fund for our first when she was born a couple years back.

529 seemed far and away the best option, especially if you live in a tax advantaged state.

 

[svivian]

Yep 529 seems to be the best option. Plus the tax advantages. I also learned that 529 funds can be moved over to siblings if the funds are not used.

Also If the kid qualifies for scholarships you can withdraw up to the scholarship amount without penalty other than regular income tax on gains.

Colorado has a grant right now that will pay up to $2500 into a 529 for the first 5 years with qualifying contributions

 

[Novahunter]

We have our kids inheritance funds from their birth family in Market Linked CD's. FDI C insured, so they can't lose the principal, and the yearly interest rate earned has been 8% to 12%.

For a no risk investment, they have been fantastic!

 

[Sunshine40]

Setup a 529 college fund and add a contribution.

My grandmother did this for my 2 brothers and I and it was the best gift anyone could have given us.

 

[eamyrick]

I did 529 for both of my boys. Plan to nearly fund state school in Texas which is 100-110k right now. If they get a scholarship you can withdraw penalty free and contributions can be withdrawn penalty free anytime. Also, new law past last year that up to 35k can be rolled into a retirement account for them if unused. I got mine through BOA/Merrill and picked a low cost fund that mirrors the S&P 500.

Just saw that you followed up with no 529 interest. I get it. At the end of the day whatever makes the most sense for your risk tolerance I would just invest and give to them when you decide.

 

[mgray]

We’re going through the same process for our five kids. Correct me if I’m wrong, but the benefit of a 529 plan is tax savings? But then it’s also tied to higher education? If I’m correct, are the tax savings on a 529 more beneficial compared to some other type of long term investment account? In my situation, odds are at least one of the kids will go to school, but I’m not sure all of them would. I’d like something each kid could access, even if it were for something else, like a house or starting a business. Sure wish I had a rich uncle…

 

[sndmn11]

We skipped the 529 and put monthly money from multiple origins into mutual funds. He turns 7 this weekend and could pay through a bachelors already.