Facts & Figures to Help You Build Wealth
It pays to invest in kids!
Should I open an investment account for my children or grand-children? That’s a question families might ask. “Yes!” advise elders. That’s a no-brainer for grandparents who have already reaped the rewards of investing their money over the years.
In the past, Nanas and Papas often welcomed newborns into the family with U.S. savings bonds. By the time baby turned 18 and headed for college, those bonds were worth three or four times as much. Today, there are lots more options. Some grow even bigger.
Save today . . . for college tomorrow
To save for college costs, some parents select 529 plans, tax-advantaged tools designed to invest in further education. Grandparents can also fund these plans for kids. Formally called “qualified tuition plans,” these investment vehicles are sponsored by states, state agencies, or educational institutions.
Money put in such plans adds up, becoming valuable college resources. However, they have a few draw backs. Some cover just certain colleges, or are only good in specific states. If students want to go out of state for school, or prefer 529-uncovered institutions, they may not be able to tap into their 529 plans.
What happens if the owner of the account decides against further education, or wants to start a business with the money instead? “Parents or grandparents might be wise to invest in an extra Roth account naming the child as beneficiary,” suggests Ronald Van Surksum, certified financial planner, Advanced Asset Management LLC, Grandville, MI
“More versatile investments give leeway.’ – Ronald VanSurksum, Advanced Asset Management LLC
“More versatile investments that give leeway for unexpected decisions could be better in the long run,” he says. “If recipients opt out of college, or aren’t mature enough to use the money wisely,” he adds, “adults who hold the account can keep it intact until a young person is ready for it.” Their money is far less likely to be wasted.
Some families want their sons, daughters or grandkids to learn about saving and investing money early in life. Now, there are plenty of online options where youthful investors can put money from their piggy banks. They learn early to make good investment decisions with help of a family member. Besides the traditional Schwab, Vanguard or Etrade accounts, there are new sites like Robinhood or Stockpile that cater to high school and college students.
Ask a financial advisor for help For help on how to invest for your kids or grandchildren, contact Ronald Van Surksum: email@example.com
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