investments for children

[Jellybelly]

I always wanted to put away some money for my children, as soon as they were born. Either monthly or yearly,  but for some reason I never got around to it. Now that my oldest is almost 10, I think I better start. I don’t know anything about stocks or mutual funds or anything of the sort, and I can’t imagine putting away for than a few hundred dollars a year per kid. Does anyone have any ideas? Am I wasting my time if I just deposit it in a bank account for them? It prob won’t grow much

[Kobe Bryant]

I think everyone should have a simcha fund for every child ( equivalent to a college fund )
If one just put in 50$ a month per child in good mutual funds , over 20 years it would grow to a sizable amount.

I always wanted to put away some money for my children, as soon as they were born. Either monthly or yearly,  but for some reason I never got around to it. Now that my oldest is almost 10, I think I better start. I don’t know anything about stocks or mutual funds or anything of the sort, and I can’t imagine putting away for than a few hundred dollars a year per kid. Does anyone have any ideas? Am I wasting my time if I just deposit it in a bank account for them? It prob won’t grow much

[puddles]

I always wanted to put away some money for my children, as soon as they were born. Either monthly or yearly,  but for some reason I never got around to it. Now that my oldest is almost 10, I think I better start. I don’t know anything about stocks or mutual funds or anything of the sort, and I can’t imagine putting away for than a few hundred dollars a year per kid. Does anyone have any ideas? Am I wasting my time if I just deposit it in a bank account for them? It prob won’t grow much

Open a free Fidelity, Schwab etc. account. Put it into the SPY. Let it ride for as long as possible.

[dealfinder11]

I always wanted to put away some money for my children, as soon as they were born. Either monthly or yearly,  but for some reason I never got around to it. Now that my oldest is almost 10, I think I better start. I don’t know anything about stocks or mutual funds or anything of the sort, and I can’t imagine putting away for than a few hundred dollars a year per kid. Does anyone have any ideas? Am I wasting my time if I just deposit it in a bank account for them? It prob won’t grow much

if the numbers were bigger i would recommend opening an UTMA/UGMA, which would allow money to grow tax free for child. However if you are going to put in an index fund anyway, then there are no realized gains (until you sell). Personally i would still set up an UTMA through Fidelity (its a very easy process), set up automatic monthly deposits for however much, and deposit into FNILX (zero fee s&p 500 fund). At the end of every year that has gains, i would sell and repurchase those shares (tax gain harvest) as it would prevent a tax hit when you want to redeem, and any gains under 1k in an UTMA do not need to be reported on tax return.

[ckmk47]

At the end of every year that has gains, i would sell and repurchase those shares (tax gain harvest) as it would prevent a tax hit when you want to redeem, and any gains under 1k in an UTMA do not need to be reported on tax return.

Wash sale rules don't apply?

[mercaz1]

juvenile whole life policy

[aygart]

Wash sale rules don't apply?

https://www.wsj.com/articles/SB10000872396390444138104578030470128080176

[dealfinder11]

https://www.wsj.com/articles/SB10000872396390444138104578030470128080176

Wash sale rules don't apply?

Nope. Only on losses.

[ckmk47]

juvenile whole life policy

What return do they give  you?  What are their fees?  Do they protect from market downturns?
Over the long haul, a no or low fee index fund, or a straight index like SPY, even with downturns, might do better. 

[Shauly101]

https://www.wsj.com/articles/SB10000872396390444138104578030470128080176

Blocked from the article. Mind c/p?

Tia

[mercaz1]

What return do they give  you?  What are their fees?  Do they protect from market downturns?
Over the long haul, a no or low fee index fund, or a straight index like SPY, even with downturns, might do better.

you might do better with SPY but this is guaranteed and the extra benefit that your kid has insurance even if he is uninsurable later in life

[dealfinder11]

you might do better with SPY but this is guaranteed and the extra benefit that your kid has insurance even if he is uninsurable later in life

How much are the monthly payments? what happens if you lapse?

[Kobe Bryant]

Whole life police is to middle class what a lottery ticket is to the low class

juvenile whole life policy

[ExGingi]

Wow. So many uninformed and outright wrong posts in this thread.

Advice #1, an anonymous online forum isn't the place to go for this.

From experience I can tell you that I put away money (at birth and monthly thereafter) in a top performing Mutual Fund when my oldest daughter was born, by the time she was 18 I needed to pull it out of there for a variety of reasons (qualifying for FAFSA being one of them) and I would have most definitely done better had I just put the money to grow at interest with no risk of loss.

I put money into Juvenile policies, but NOT for the purpose of saving money for the children (with the exception of the Allstate glitch from a few years ago).

[yos9694]

you might do better with SPY but this is guaranteed and the extra benefit that your kid has insurance even if he is uninsurable later in life

1. The level of the guarantees doesn't even belong in a discussion about investments. At the guarantee level you might not even reach a 0% return for 20+ years. If you're counting on getting dividends then you're including returns that aren't guaranteed.

2. Not likely that you're going to be able to buy a significant amount of insurance on a kid. There are rules that prevent people from overinsuring children to prevent horror stories. Don't imagine that in 20 years from now anyone is going to be thanking their lucky stars that their parents bought $25,000 of coverage when by then $1M probably won't even be enough for a HoH.

Insurance has its place in an investment portfolio but it's not for everyone.

[dealfinder11]

Wow. So many uninformed and outright wrong posts in this thread.

Advice #1, an anonymous online forum isn't the place to go for this.

From experience I can tell you that I put away money (at birth and monthly thereafter) in a top performing Mutual Fund when my oldest daughter was born, by the time she was 18 I needed to pull it out of there for a variety of reasons (qualifying for FAFSA being one of them) and I would have most definitely done better had I just put the money to grow at interest with no risk of loss.

I put money into Juvenile policies, but NOT for the purpose of saving money for the children (with the exception of the Allstate glitch from a few years ago).

Agree on advice #1. Now name one flaw in my suggestion.

[ExGingi]

Agree on advice #1. Now name one flaw in my suggestion.

I stopped reading your suggestion after the first sentence suggesting that an UGMA/UTMA grows tax free. While at this point I did go back and read your entire post and see how you suggest avoiding paying taxes on it, that is still different than tax free.

There are several other problems with UGMA/UTMA accounts. The two most common ones are FAFSA eligibility, and the fact that it's the child's money and you have no control over it in the future.

[dealfinder11]

I stopped reading your suggestion after the first sentence suggesting that an UGMA/UTMA grows tax free. While at this point I did go back and read your entire post and see how you suggest avoiding paying taxes on it, that is still different than tax free.

There are several other problems with UGMA/UTMA accounts. The two most common ones are FAFSA eligibility, and the fact that it's the child's money and you have no control over it in the future.

You can transfer funds out of an UTMA at any point prior to child reaching of age. A method to avoid paying taxes is the equivalent of tax free. Will concede the FAFSA point as i don't know much to argue with you, but regardless, that depends on your situation.

[bubkiz]

A option to consider if your children earn money (or if you have a business/side gig and are able to hire them for some tasks) is a Roth IRA. Money grows tax-free and since it is a retirement account it will not affect FAFSA eligibility. Contributions (which are limited to the amount of earned income for given tax year) can be withdrawn without penalty after 5 years and gains can also be withdrawn for higher education and first-time home buying expenses.

[farmbochur]

A option to consider if your children earn money (or if you have a business/side gig and are able to hire them for some tasks) is a Roth IRA. Money grows tax-free and since it is a retirement account it will not affect FAFSA eligibility. Contributions (which are limited to the amount of earned income for given tax year) can be withdrawn without penalty after 5 years and gains can also be withdrawn for higher education and first-time home buying expenses.

https://www.mrmoneymustache.com/2019/07/20/estate-planning/