What would you invest for your kids?

[tosugrad]

I just opened a custodial brokerage for each of my kids and deposited a SMALL amount of money. I was tired of having this money in CDs earning 1%. What would you invest in knowing this money won't be used for 15+ years?

Dividend paying stocks?

 

[Gofastguy]

Depends on the amount you have to invest. You're looking at growth as your main objective for a long haul investment.

 

[Vega$ NSX]

If it's money strictly for education, then 529, no question. Look at your own in-state 529 for potential tax benefits. Otherwise, states like Utah have pretty good ones (lower fees).

 

[jonas1jp]

I just opened a custodial brokerage for each of my kids and deposited a SMALL amount of money. I was tired of having this money in CDs earning 1%. What would you invest in knowing this money won't be used for 15+ years?

Dividend paying stocks?

Do you have a 529 plan for them? That's certainly an option. Regardless of whether the investment is in a 529 or not, I would look at a balanced allocation of mutual funds. When looking at 15-year returns on an aggressive portfolio vs. balanced, many times the difference is minimal. There are exceptions of course, but many people decide that the balanced allocation is better for them simply because they don't want to see the fluctuations that an aggressive portfolio exhibits. Unless you're a professional trader, which I would gather is not the case since you're asking your fellow Primers, this would be the route I would suggest. Just do your research on fund ratings, expenses, and no load vs. load funds. Morningstar.com is a great site if you know how to navigate it. Kudos for planning for your children; you'd be amazed how few parents do this. Hope this helps.

Joe

 

[tosugrad]

Already have a 529. This is for money they get from relatives for birthdays, holidays, etc. I just wanted better returns than the CDs I had them in at ING.

Im thinking a ETF or mutual fund for large cap stocks. Maybe just a 500 index fund. 15 years (min) is a long time.

 

[flaminio]

My kids each have three accounts: a 529, which is invested in an age-adjusted fund (it starts out agressive, and then gets less and less so as the kid approaches college age); a Coverdell Education Savings Account, which is invested in indexed mutual funds; and a custodial account.

The custodial account is for money gifted to them by friends and relatives (all gift money goes into the account), plus any amount from their allowance they wish to save.

In the custodial accounts, the kids (age 6 & 10) are allowed to buy any stocks or funds they wish. Right now, my 10yo is holding a portfolio of Best Buy and Amazon.com, her two favorite stores. She used to hold Build-A-Bear, but got tired of losing money in it, and sold it. My 6yo has stock in her auntie's company, because she likes her auntie.

As might be clear, I think it is important to teach kids about money and saving and how markets work. My parents never told me anything about money, and it took better than half my life to figure it out on my own. I think I'd be a lot wealthier today if I had gotten an earlier start.

 

[Ski_Banker]

I would NOT buy a diversified MF or index fund, and I DEFINITELY would not have that money in bonds. Inflation will kill your return on bonds bought at todays prices, and will be equal/bad for most stocks. I would look into GLD (gold bullion) and a few selected stocks on businesses that have exceptional pricing power. The major stock indexes may not do much in a high inflation environment, but within the index there will be very clear winners and losers.

Good stocks would have these characteristics:
-Big/market leaders -- safer, and leaders always have more industry pricing power
-Balance sheet where most debt doesn't mature for 7+ years (none floating rate)
-Industries that will do relatively well in any economy
-Limited regulation and unionization risk (Wal Mart)
-Industries that will benefit from a reversal in outsourcing, global trade (domestic manufacturing)
-Industries that will benefit from a weak dollar (dollar costs, foreign sales)

 

[DRIFTER]

I’m just doing a standard savings account and investment properties. My goal with the kids is to focus on trade skills. I’m investing in real life Usable knowledge. I don’t believe the future will be run by the basket weaving gender studies majors in 200k of debt having a contest who hates America more.

Now if the kids want to go to be a Dr or Lawyer I will support it as best I can. But I see the collage education for 90% of kids today being a massive boat anchor of debt. We trained an entire generation of children for jobs that don’t exist.

Trade skills will and are making a comeback. Especially in a society that has no patience or skill to do anything outside there highly specialized skill set.