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Started By
Message
savings for grandchild
Posted on 5/9/24 at 4:36 pm
Posted on 5/9/24 at 4:36 pm
I am a first time grandparent and would like to start some sort of savings for them. I don't think I want to do the 529, in case they don't go to school, but I would like them to be able to use it for something big in their life like buying first car or house, etc. Suggestions please?
8
Posted on 5/9/24 at 5:20 pm to tigergrl
Probably a few ways to go about it:
1. Entrust it to their parents to set aside and invest.
2. Set up a custodial account for the kids. But once they reach the age of majority, it’s theirs.
3. Go the trust route. This may add a layer of expense and complexity.
4. Or you could just set money aside and invest it. You could provide for it in your will, or just gift it if you are still alive.
And you need to be mindful of the gift/estate tax landscape in all of this.
1. Entrust it to their parents to set aside and invest.
2. Set up a custodial account for the kids. But once they reach the age of majority, it’s theirs.
3. Go the trust route. This may add a layer of expense and complexity.
4. Or you could just set money aside and invest it. You could provide for it in your will, or just gift it if you are still alive.
And you need to be mindful of the gift/estate tax landscape in all of this.
Posted on 5/9/24 at 5:26 pm to SloaneRanger
Would a trust bypass inheritance taxes?
Posted on 5/9/24 at 5:37 pm to tigergrl
Take out life insurance policy on yourself, make them the beneficiary.
Posted on 5/9/24 at 5:44 pm to tigergrl
The 529 can rollover to a Roth if they don’t use it all
Posted on 5/9/24 at 7:40 pm to DaBeerz
quote:
The 529 can rollover to a Roth if they don’t use it all
I would go this route. Set up a 529. It grows tax free and if they decide they don't go to school, depending on certain states or plans, it can roll over into an ROTH IRA.
Posted on 5/10/24 at 7:56 am to Dawgfanman
I'm hoping they could use the money in their early 20's and I would like to think I would still be alive then. (hopefully lol)
Posted on 5/10/24 at 7:58 am to Cdawg
ok I didn't know this was an option. Can you personally withdraw from a 529 if it's not used or does it have to be rolled over to something? I will do some more research on the 529 in Louisiana
Posted on 5/10/24 at 8:48 am to tigergrl
Depending on how much you want to save, you could split the amounts between a 529 and a high-yield savings account.
I deposit a monthly amount into a 529 account for each of my kids. You'd get tax savings on the 529 account and they could roll-over unused portion to an IRA if they don't use it for college.
Then any birthday money, allowance, grade money goes into a high-yield savings account. Plan is just to switch ownership of the account to them at the time it makes sense for either a purchase or just to have in their name.
I deposit a monthly amount into a 529 account for each of my kids. You'd get tax savings on the 529 account and they could roll-over unused portion to an IRA if they don't use it for college.
Then any birthday money, allowance, grade money goes into a high-yield savings account. Plan is just to switch ownership of the account to them at the time it makes sense for either a purchase or just to have in their name.
Posted on 5/10/24 at 8:53 am to tigergrl
quote:
Can you personally withdraw from a 529 if it's not used
Yes. If it's not used for education, then it's taxed on what you withdraw.
Posted on 5/10/24 at 10:32 am to tigergrl
It depends what your goal is. Is it to just give them money or is there a reason for it? Examples include being a firm believer in private school, or college education, wanting to help buy their first house, etc. If you are just going to give them money a custodial account is easiest but you won't really make money off the principal and they get it at 18.
Do a trust if you have a decent chunk of assets. I did this recently and I was so relieved. To know that you have people (attorney, trustee, and financial manager) assigned to it in case of tragedy is such a weight off of the family's shoulders.
I would do a 529 as they can rollover to a retirement acct. if they don't go to college. It's better than just saving cash in a custodial acct plus it provides you a tax benefit.
Do a trust if you have a decent chunk of assets. I did this recently and I was so relieved. To know that you have people (attorney, trustee, and financial manager) assigned to it in case of tragedy is such a weight off of the family's shoulders.
I would do a 529 as they can rollover to a retirement acct. if they don't go to college. It's better than just saving cash in a custodial acct plus it provides you a tax benefit.
Posted on 5/10/24 at 11:43 am to SloaneRanger
quote:Bad idea imo.
1. Entrust it to their parents to set aside and invest.
Posted on 5/11/24 at 7:14 am to SloaneRanger
quote:
Set up a custodial account for the kids. But once they reach the age of majority, it’s theirs.
Imo, the way to go. Just have to teach them well enough to know that it’s not spending money when they turn 18.
Posted on 5/12/24 at 7:00 am to tigergrl
$7000 into a brokerage account and invest in $VOO or similar.
With established historic rates that it will double every 7 years, it will be worth over $3MM at retirement.
With established historic rates that it will double every 7 years, it will be worth over $3MM at retirement.
Posted on 5/12/24 at 8:57 pm to tigergrl
529s aren't just for college, don't forget.
College
University
Vocational and trade school <----------
Public, private, or parochial elementary and secondary school
If my grandkids (which I don't have yet) needed my help to buy a Nissan Altima or a condo, I'd be... angry... at my kids for taking trips to Disney and 30A while expecting I'm going to make up the difference.
College
University
Vocational and trade school <----------
Public, private, or parochial elementary and secondary school
If my grandkids (which I don't have yet) needed my help to buy a Nissan Altima or a condo, I'd be... angry... at my kids for taking trips to Disney and 30A while expecting I'm going to make up the difference.
Posted on 5/14/24 at 11:50 am to Mariner
I would want them to have it for school if needed, if they don't go to school, or if they do and there is money left I would like for them to get their first house, car or invest it themselves if they choose to do so.
The trust is a good idea, it's what we are looking to do for ourselves here soon. I am going to do some more digging on the 529 also. Thanks for input
The trust is a good idea, it's what we are looking to do for ourselves here soon. I am going to do some more digging on the 529 also. Thanks for input
Posted on 5/14/24 at 4:22 pm to tigergrl
Take it from someone like me who had leftover college money… it didn’t go for anything productive. I managed to save some and used it when I needed for important stuff but I blew through a lot. Still have some 20 years later…but Most young people just can’t grasp the concept of saving, so you would be doing them more of a favor maybe with the 529 to Roth and compounding that interest
This post was edited on 5/14/24 at 4:23 pm
Posted on 5/14/24 at 7:49 pm to DaBeerz
Dividend reinvestment program (DRiP) get their ss# and send money on holidays, birthdays,ect. they won't even realize what's going on for over a decade. You should have a good start for them by then
Posted on 5/14/24 at 8:18 pm to tigergrl
You are welcome. It is an amazing feeling as a grandchild when grandparents are altruistic and bless the child growing up, whether it be for college, their first car or house, or just some spending money from time to time.
You are one good grandparent!
You are one good grandparent!
Posted on 5/16/24 at 8:43 am to tigergrl
I did this for my grandkids a couple of years ago. Considered the 529 route, but decided to just do a custodial account. It will be theirs once they become adults. My intent is to add money to it every few years. Not life changing money, but hoping to instill an investing mindset in them. 2 of my teenagers have already added some of their own money, and track their balances on their phones, so I am pleased.
For initial investment, I split the money between s&p500 and nvda. Intend to split the money between s&p500 and another stock for next deposit.
The 529 route has merit. Separately, I loaned my oldest grandkid enough money to pay for 1 year of college. 0% loan that he is paying back at $100/month. I have 9 grandkids. Yikes.
We could not find any low interest borrowing programs for college students. This is troubling. Maybe if the government assisted with this, then they wouldn't be in the loan forgiveness business.
For initial investment, I split the money between s&p500 and nvda. Intend to split the money between s&p500 and another stock for next deposit.
The 529 route has merit. Separately, I loaned my oldest grandkid enough money to pay for 1 year of college. 0% loan that he is paying back at $100/month. I have 9 grandkids. Yikes.
We could not find any low interest borrowing programs for college students. This is troubling. Maybe if the government assisted with this, then they wouldn't be in the loan forgiveness business.
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