i know very little about the 529 college plan, but my sister told me that she had a coworker who contributed to one of those for her child and they decided not to go to college when they graduated high school. The coworker asked for her money back and the administrators of the plan, in this case the state of MI, told her to assign the account to another child.
it was a bit difficult, but i think she was able to get her money back. I believe this was some years ago, but if you do invest in one of those plans make sure you ask what happens with the account if the child never goes on to attend higher education.
Thank you for this. My young son has a custodial savings account, but would like to open a custodial investment account also. However, I don’t know really where or how to begin. I have to become investment literate. Thanks for sharing.I like success stories like this but hate how often they contain little information about how to do it yourself or make it seem impossible unless you’re already rich.
You don’t need 2k a month to do this. You can do this with $1. Anyone can open a custodial account for their child and buy stocks, bonds, and etfs at one of the top 5 brokerages for free:
Fidelity <allows fractional buys of ETFs and any stock.
Charles Schwab <allows fractional buys of S&P 500
TD Ameritrade
ETrade
Merryl Lynch
Contribute as little a $1 for you child. You can do it on a weekly, monthly or on a whenever basis. Learn about index ETFs, Stocks, bonds, etc and buy some for your child. Some brokerages even allow fractional purchases of stocks and ETF, so if all you can afford is $1 of a google stock, you can buy it. Most brokerages do not have minimum amounts to open an account and there is no fee for buying stocks or selling stocks infrequently.
We do this for our child. We make regular contributions and all of his birthday and Christmas money goes into that account to buy the following:
S&P 500 indexing ETFs like VTI or SPY.
International Emerging and Total World ETF like VEA and VWO.
Total US Bond ETF BND
He’s made a 15% return on his money in less than 6 months from to VTI alone. Meanwhile, a savings account would have netted him .01% interest after a year. Toys and fancy clothes last 3-4 months before they end up in the trash. Financial stability can last a lifetime if managed well.
This is not financial advice. I’m just telling you what we do.
Thinking of opening one for my son who’s 10. Though I’d like for him to attendYou get back whatever was put in. Any capital gains are taxed. You can also use money from a 529 plan to pay off student loans. Some people have been doing that during Covid since interest rates are 0%
Lol this assumes that we stay in a bull market. The market that we’ve have for the past 8-9 years or so is not guaranteed forever, and in fact, is unlikely to continue on this trajectory. That $168k gain in 12 years is not typical, and would not have been possible during the 12 years prior to that. She is handling it the right way.
I hear you. Many folks who don't understand investments, don't realize so much is dependent upon your age and when you want to retire. I'm for all of us doing what we have to do and educating one another. Is that realistic here?I'm not saying that it was the last 12 years, and I'm aware of the volatility of the market. Most importantly, my investment manager is. He manages my account by my age, and as I get older, the investments are more conservative.
This child is a baby. There will be plenty of ups and downs to recover and make a decent coin. That's all I'm saying.
Is that all you’re saying? Because I only went by what you posted, which, to remind you, was that her mother was not being “aggressive” enough, that she was being “too conservative,” and that she could “invest less” and “make more in less than half the time.” It was giving Madoff. And then there was your assertion that doubling their money was merely “okay,” while pointing out your own roughly 18% annualized gains, which again, are only possible not because you or your financial advisor are geniuses (no shade, perhaps you both are), but because we are in a ridiculously amazing bull market. To highlight this, someone recently bumped a stock market thread from 2013 in which I was legit cheering us all on because the Dow broke 17k. In my wildest dreams, I couldn’t have envisioned we would be where we all today (I don’t think anyone could have). And here we are.I'm not saying that it was the last 12 years, and I'm aware of the volatility of the market. Most importantly, my investment manager is. He manages my account by my age, and as I get older, the investments are more conservative.
This child is a baby. There will be plenty of ups and downs to recover and make a decent coin. That's all I'm saying.
Stock pickers have always had a terrible track record. The best a financial adviser can do w/ average investors is help you with gaining some market literacy, education, checking in on making sure you're properly allocated for your risk tolerance, age, and intended use of your money & ensuring you're not paying too much in fees and that your money is with bonded, licensed firms & not some Madoff type mess. Everybody at every financial level should have an Oprah's - I sign my own checks - mentality when it comes to their personal finances and never give too much control to anyone, not even a spouse.There are so many financial charlatans around after last year’s market. I applaud any married couple who invests in their child’s future. What I don’t like is that the numbers being thrown out are based on a continuous 10% return on investment for the next 16 years. That’s not going to happen for most people, and will definitely not happen for the overall market. It may happen for them because they are financial advisers and will know how to navigate the market. The average person who begins to save for their child will more than likely not have the same returns, especially if they are individual stock pickers.
Wait - she’s not nearly a millionaire?I thought the kid was older and close to 16 with the portfolio already somewhat close to the million, and they were telling a story of a kid whose mom started investing years ago when she was 18 months...
Why are they broadcasting PREDICTIONS on investment?
I applaud the mother for starting to invest for her daughter. As a FP, she has the knowledge to make the money grow. It is so much than letting the money sit in a savings account with no real interest earned, especially now with rates being so low!
Even if it is only $5 per week, parents should invest/save for their kids. That will be the best gift to help them start their adult life!
Wait - she’s not nearly a millionaire?
what is this story then? Fairytales and fallacies?