We just had our first child and are focused on making her life better than mine and my wife’s. We will be opening investment accounts for her this year, with the goal that money will not be a hinderance to their happiness or following their dreams, by the time they are 35. In other words, I would love for their investments and our discipline to have earned them ~$2.5m USD (our 1 million + inflation) by my age. I should add that my wife and I are already well on our way to retirement.
Things don’t always go according to plan though, so I would love to hear from other parents who took a similar approach to setting up their kids from birth. How has it panned out for your family?
Parents who started investing for their kids at birth, how did that go?
byu/sbFRESH ininvesting
Posted by sbFRESH
12 Comments
what’s the difference between this and just investing this money in your own existing accounts? i am not magically going to invest more because i opened a new account
It’s very nice of you to give your child a leg up, but remember you cannot borrow for retirement. Teaching your child good life lessons and having a well funded 529 for college is more than most parents are able to do. Do not lose focus on retirement for you and your wife.
That’s a lot of money. How much money do you think you’ll need for your own retirement and care?
People value things they earn and one of the best gifts you can give your children is them not have to be responsible for your care.
Throwing a ton of money at your kids is not a magic recipe for happiness.
There are better tax advantaged ways to do that – trusts, etc namely.
You also don’t want your kids *knowing* they’re getting $1M at 35. They’ll just use that to buy a house and ignore their own savings habits
My kid is 10 and has $18k in a custodial brokerage account. We opened it right before covid and put in 1/3rd of the covid stimulus we got as well as $150/month. The $150/month is more recent, maybe the past year. Prior to that it was $75/month for the prior 3 years or so. Only half of Christmas/birthday gifts before that.
Plan is to give it to him when he’s 25 for a down payment on a house.
Obviously you make a lot more than I do. I’d suggest a trust or something.
I agree with your sentiment. My wife and I began investing shortly before we got pregnant with our first child. We simply opened an account specifically for our children’s inheritance, funded it for a year, and let it ride. It’s doubled in the last two years with no additional contributions. We’ve been fortunate to have some good investments and a good market.
Good idea. Power of compounding over the years is very beneficial
I put the n about $1k and its worth $5k. I’ll call it a win. Wish I put in more.
I’m fortunate enough to be one of those kids, I got stocks for Christmas every year. My parents also pressed financial literacy and education . Together, it has been an incredible leg up and cushion to fall back on. I’m almost 40 and I still haven’t really touched any of the money/stocks, I’m saving it all for my retirement or catastrophic illness (because I live in the US).
Absolutely do it, your children will appreciate it.
Not bad. At 18 she’s pretty well off. Close to being set.
I’m still waiting for Alfred to come pick me up.
Investing in my son’s Coverdell ESA paid for his bachelor’s degree. Admittedly, that was at a public, state university. But he graduated this year without ever taking out any student loans.
Now, if only the job market would start hiring again…