Every parent wants to put their children in the best position for success. A 529 savings account, a custodial IRA and a CD ladder can help you do just that. One key thing to remember is that your own financial future needs to come first.
Before you even start to consider investing for your children, make sure that it will not have a negative impact on your own personal savings first. This of this like the announcement just before the airplane take off. They advise you to place your mask on first, before placing it on your child.
Every parent wants to put their children in the best position for success. A 529 savings account, a custodial IRA and a CD ladder can help you do just that. One key thing to remember is that your own financial future needs to come first. Before investing in any account for your kids, make sure that you save enough for your retirement.
To ensure you’re making the best financial decisions for your future and your children’s, consider working with a financial advisor. I currently use 3 different entries for custodial accounts.
The 529 savings plan works well. The main benefit of saving in a 529 plan is having your contributions grow tax-deferred. As long as you use the money in the account for qualified education expenses, withdrawals are always tax-free. The tax plan passed by President Trump also lets you to use money from your child’s 529 account to cover tuition for private school in kindergarten through 12th grade.
Most 529 savings plans allow you to invest money through mutual funds. There should be enough available funds that you can pick and choose what to invest in, but it is also possible to find plans that invest in more than just mutual funds.
Traditional or Roth IRA is also a great way to get your kids started in saving and investing. The contribution limits ($5,500 per year) and withdrawal rules for regular IRAs still apply to custodial IRAs. The upside is that once your kids are old enough, they can take penalty-free withdrawals from their accounts for qualified education expenses or to put money down on their first home.
My favorite is the plain old custodial investment account. I am in the process of teaching my daughter all about stocks and investing in businesses that she uses and is familiar with that she believes will grow and become more profitable. She’s ten and my goal in to tach her enough about investing in stocks that she trades and makes money on a daily rate and can aspire to make the same amount or more that she spends on Robux.
