Cliff Notes:

I have two young kids one is five one is a newborn. I want to have an account for each just for future life expenses. This will be separate from a 529 (which we are already funding) for things such as weddings, vehicles, etc. I don’t necessarily want the account to be in the kids names just a separate account where I stash away Funds for these types of things.

I know the simple answer is a high yield savings account for each but I don’t foresee interest rates remaining this high on these accounts long-term, so I was thinking to just open a brokerage account for each kid and auto invest into an S&P 500 fund, such as VTSAX. I’m OK with moderate risk as I have several years before I will ever need this money. Is there another option I’m overlooking from a tax perspective I know I will have to pay capital gains when we start using this money in the future.

Thanks in advance for any responses

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Posted by Dandaman

Louisiana

Member since May 2017

707 posts

Posted on 10/1/23 at 9:16 am to Jblac15

Custodial brokerage account. I know you don’t want it in their names, but why pay taxes based on your income. Just don’t tell them about it.

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Posted by LSUtiger89

Baton Rouge

Member since Dec 2007

3654 posts

Posted on 10/2/23 at 3:13 pm to Jblac15

quote:
529 (which we are already funding) for things such as weddings, vehicles, etc.

You know a 529 really can’t be use for many of these things. Especially a wedding. Now 529 aren’t bad but make sure of what you were using it for and can show educational expenses for it. Or use an UGMA/UTMA. But look in to those! There are some tax advantages on thresholds of growth. But that may defeat the being in their name. It’s your asset until they turn 18/21.

This post was edited on 10/2/23 at 3:18 pm

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