Go to Schwab and open a custodial account. Put it in SWPPX and make him a millionaire
Beasley55 on
A 529 is your best tax-advantaged vehicle. If the funds go unused, up to $35k can be rolled into a Roth IRA (subject to current rules and limits).
Personally, my plan is to invest up to that projected rollover limit, adjusted for inflation by the time they turn 18, in a 529. Beyond that, I’m investing in a joint brokerage account (WROS).
The brokerage account gives my wife and me more control and flexibility over how the money is ultimately used. Yes, there’s a higher tax cost on the gains, but based on my calculations, the added liquidity and control are worth that tradeoff.
CircuitGuy on
In Wisconsin, 529 contributions are deductible on state income tax. See if there’s something like that in your state. They can be used tax-free for many things, excess can be rolled into an IRA, and the taxes and penalties for withdrawing them for other purposes are not al that much higher than the taxes on money earned in an ordinary account.
thereddituserusa on
529 acct for your son’s education is your best option. Invest in age based portfolio and it will adjust stocks-bonds-cash ratio as your son gets close to college age.
4 Comments
Go to Schwab and open a custodial account. Put it in SWPPX and make him a millionaire
A 529 is your best tax-advantaged vehicle. If the funds go unused, up to $35k can be rolled into a Roth IRA (subject to current rules and limits).
Personally, my plan is to invest up to that projected rollover limit, adjusted for inflation by the time they turn 18, in a 529. Beyond that, I’m investing in a joint brokerage account (WROS).
The brokerage account gives my wife and me more control and flexibility over how the money is ultimately used. Yes, there’s a higher tax cost on the gains, but based on my calculations, the added liquidity and control are worth that tradeoff.
In Wisconsin, 529 contributions are deductible on state income tax. See if there’s something like that in your state. They can be used tax-free for many things, excess can be rolled into an IRA, and the taxes and penalties for withdrawing them for other purposes are not al that much higher than the taxes on money earned in an ordinary account.
529 acct for your son’s education is your best option. Invest in age based portfolio and it will adjust stocks-bonds-cash ratio as your son gets close to college age.