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Brobocop
LSU Fan
Baton Rouge, LA
Member since Feb 2018
1069 posts

Children investment accounts
I have about $4,000 to invest for both of my kids that will both receive regular contributions.

Should I go with a 529, or a like a Vanguard account?

Would love to hear some of my best options. Thanks!


cgrand
New Orleans Pelicans Fan
HAMMOND
Member since Oct 2009
22606 posts
 Online 

re: Children investment accounts
depends what you intend to use the money for.
if higher education then a 529 is a good choice as long as it’s self directed


TheWiz
LSU Fan
Third World, LA
Member since Aug 2007
10837 posts

re: Children investment accounts
Like CGRAND said, for education use a 529. I put my kid's bday/Christmas money in a UGMA/UTMA at Vanguard.
This post was edited on 6/24 at 8:40 am


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Auburn1968
Auburn Fan
NYC
Member since Mar 2019
1826 posts

re: Children investment accounts
The last time I looked into it, it depended on how old the kids were. There wasn't much advantage for kids 3 or 4 years before college age. Looked better for young ones.


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ODP
New Orleans Saints Fan
LA
Member since Oct 2015
1042 posts

re: Children investment accounts
Go with a LA Start 529. They have some vanguards funds to choose from and if you live in LA you could see some benefit in state taxes.


DandyPimp
LSU Fan
New Orleans
Member since Jan 2007
925 posts

re: Children investment accounts
I have a similar question, however I'm already fully funding (over tax break amount) a 529, but expect college expenses will eventually deplete the account. My parents want to start funding an account for my kids. Goal is more for getting started in life after college. Thought about a Roth but they do not have sufficient income.


TheWiz
LSU Fan
Third World, LA
Member since Aug 2007
10837 posts

re: Children investment accounts
quote:

Thought about a Roth but they do not have sufficient income.


Exactly.

Probably the UTMA/UGMA account will work best. They cannot touch it until they are either 18 or 25. Can't remember right now. I started one for my kid for bday/Christmas money. I just threw it into the furthest out target fund, so I can literally just let it cruise control and only have to add money to it.


LSU
LSU Fan
Houston
Member since Oct 2003
7946 posts

re: Children investment accounts
quote:

Probably the UTMA/UGMA account will work best.


UTMA accounts are what we're doing for both kids. Ours were not opened in Louisiana, but the age of majority is 18 in Louisiana. It's 21 in many states though.

The money is intended for college at this time, but the flexibility exists for it to be used on any expenses for them. Both of our UTMA accounts will likely exceed the amount required for college by the time they're that age, so allowing them the opportunity to use it for other "starting out" expenses afterwards will be great.

529 accounts have a specific purpose & there's nothing wrong with that, but the restrictions of what the funds can be used on swayed me to the UTMA instead.

I know some people have the concern of an 18 or 21 year old kid blowing all their UTMA money as soon as they get it, but I don't share this concern.


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Weekend Warrior79
LSU Fan
Member since Aug 2014
5439 posts

re: Children investment accounts
quote:

UTMA accounts are what we're doing for both kids

This is what we did for our kids as well, the wife is concerned about the fact the money turns over to our child at 18; but I figure worst case scenario we can pull it out to cover their expenses right when she turns 17.

My understanding of the downside of the UTMA is you will pay taxes on the earnings the year they are earned; but it's at the kids rate.

As far as 529 Plans go, you need to research the fee structures. You can get tax benefits, if you qualify, but the plan itself fees you to death. And, you are limited to what you can spend it on. The UTMA allows you to spend the money on "anything" for the child.


Ristina
Member since Jun 2020
9 posts

re: Children investment accounts
I want to do this for my children. It seems to me that this is a good idea for those who have the opportunity to take care of the future of his children.


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yatesdog38
Mississippi St. Fan
in your head rent free
Member since Sep 2013
11499 posts

re: Children investment accounts
Utma is 21 in most states and that is when they become the Minor's assets

As far as avoiding or minimizing tax burden... Munibond fund might be a good option and they are historically safer than corporate debt. Been better returns lately if you are comparing debt ratings.


yatesdog38
Mississippi St. Fan
in your head rent free
Member since Sep 2013
11499 posts

re: Children investment accounts
Also educate your child about money and of they let you at the age of majority they can add you as a joint owner if they would like or limited authorized trader.

Trusts are also an option.


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LSUtiger89
LSU Fan
Baton Rouge
Member since Dec 2007
1774 posts

re: Children investment accounts
I did an UGMA/UTMA for my kid.


3D
LSU Fan
NJ
Member since Sep 2013
506 posts

re: Children investment accounts
DRIP dividend reinvestment program can be used for anything later on


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Palmetto08
Member since Sep 2012
3295 posts
 Online 

re: Children investment accounts
quote:

As far as 529 Plans go, you need to research the fee structures. You can get tax benefits, if you qualify, but the plan itself fees you to death.


What fees? I don't think the fees are very high if you set it up yourself. Don't let an advisor set it up.



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