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This Mom Created an Investment Portfolio for Her 18-Month-Old Daughter. Now She’s on Track to Be a Millionaire by 16

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Dominique and her husband started Dawsyn’s investment portfolio right after she was born.

Their initial contribution consisted of around $4,500, followed by regular contributions of at least $2,000 a month, sometimes more.

Most of the money currently sits in Dawsyn’s investment accounts in various stocks and has reached $50,000 in 18 months.

“We’re trying to set [Dawsyn] up for financial success in life,” says Broadway. “We definitely want her to feel financially empowered and never really have to worry about money if she follows along with some of the things we put in place.”

Among those things are a Roth IRA, a custodial savings account, and a custodial investment account.

Between them, Dawsyn has amassed a little over $50,000, with all of that money earning compound interest.

Here’s how Broadway is investing in her daughter’s future and how you can do the same — whether you have $5 or $50,000.

Here are three things Dominique is doing to provide for her daughter’s financial future and give her the knowledge she needs for financial success. And you can do the same, regardless of how little or how much money you have available right now.

At 18 months old, Dawsyn’s investment portfolio looks like this:

She has a regular custodial savings account with a bank, where she earns interest on the cash deposit.

She has a custodial investment account managed by the financial services company Acorns, with regular contributions each month.

She also has a minor Roth IRA, which she’s eligible to contribute to due to her “income” from being a brand ambassador for Finances De·mys·ti·fied.

Pro Tip

You don’t need lots of money to start investing. It’s better to start early with whatever you have and let your money grow over time with compound interest.

Because Dawsyn is so young, her investment portfolio can afford to be aggressive, with high-risk-high-reward investments like stocks, international equities, and aggressive mutual funds.

If Dominique continues her regular contributions of $2,000 a month and is able to benefit from a similar rate of return of 10%, Dawsyn’s portfolio will be worth $1.1 million by the time she reaches age 16.

“These aggressive investment strategies and active trading is what’s driving a high rate of return,” says Broadway.

How to Set Your Children Up for Financial Success

1. Open these three accounts

Broadway recommends three account types for your child.

“You don’t have to do all three,” Broadway advises. “Pick one based on what works for you, your financial situation, and the goals you have for your family and your children.”

Custodial savings account.

A custodial savings account is the easiest to set up and perfect for anyone who’s not ready to start investing yet but wants to put aside money for their children, says Broadway.

It can be opened at most banks or credit unions and will let you hold and manage money for your child until they reach the age of maturity.

Custodial investment account.

Another option is a custodial investment account, which is similar to a custodial savings account in that an adult manages the account on behalf of a minor.

“The only difference is that in this custodial investment account, you are able to actually start making investments for your child,” says Broadway.

And the barrier for entry is lower than what many people assume. “Don’t feel like you need a lot of money,” she adds. “You can literally start investing for $5.”

529 college savings plan.

For parents with college-bound children, a 529 college savings plan is a great option to help save for your child’s education.

With a 529 plan, you contribute a certain amount of money to be invested in mutual funds or exchange traded funds, with the investment plan tailored to the target date of when your child will go to college.

Some states allow you to use those funds for private school tuition as well.

A major draw of a 529 plan is the tax benefits, which may include both federal and state tax write-offs and credits.

Different states offer different 529 plans, so be sure to check the details of your state’s plans on the official College Savings Plans Network website.

Some state’s 529 plans don’t even require the owner or beneficiary to be a resident.
2. Start investing early

“I tell people all the time, the earlier you start saving, the less you have to save because of the power of compound interest,” says Broadway.

“So start small. Don’t feel like you got to have millions and billions and trillions of dollars. $10 a week, $10 a month, just do something.”

You can sign up for a high-yield savings account with no minimum deposit and start earning interest right away on whatever money you have.

You can also open an investment account to let your money grow faster. “You could start investing for yourself or investing for your children for as little as $5,” says Broadway.

If you don’t currently have kids but would like to build a savings portfolio for future children, you have options as well.

Although you can’t open a custodial savings or investment account in your child’s name until they have a Social Security number, you can open a dedicated savings account under your own name for the purpose of setting aside that money for future children.

You can also open a 529 plan for another child, such as a niece or nephew, Broadway says. If you later have children of your own, you can change the beneficiary recipient.

Whichever way you choose to invest, “don’t procrastinate or feel like you don’t have enough money,” says Broadway. “Just start with what you can.”
3. Talk to your kids about money and let them participate in the process

“My family always talked about money, like, all the time,” Broadway says. “Not in a negative way.

And always really in optimistic, positive ways and just showing me that money was a part of our everyday lives.”

She plans to do the same with her daughter. “Having those conversations really early is something that’s important,” she says.

“We want finances and investments to be daily conversation pieces in our home.”

Another thing she plans to do as her daughter gets older is to let her participate in the investment process.

“One of the things we plan to do with our daughter is making sure she’s involved with these investments,” says Broadway. “As we’re picking stocks, [we] let her pick the stocks.”

For parents who are searching for ways to initiate a conversation about investing with their children, Broadway recommends looking at companies that their kids already use and love.

“That’s going to be the best way to pique your children’s interest into potentially investing and owning,” she says.

“I think that as parents, we should be talking more about ownership with our kids,” she adds.

There’s power in being a partial owner of a company instead of just being a consumer, Broadway believes, and she plans to teach her daughter that as soon as possible.
 

Shadowofyoursmile

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YES! I'm looking into this as well. It's good seeing black parents being financially responsible and preparing their children for the future financially.
 

NopeNotMe

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Very smart woman. My mother built my credit from when I was a teen and on. She took a credit card out in my name under her account, then when I got my own account, she also used a card in my name for her own purchases, and paid them on time like her responsible self always does. It’s because of her that I have had great credit since a young age.
 

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CarterWT

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That’s what I’m talking about but instead I would put it in a trust. If anything happens the accounts have thru probate if I’m not mistaken.
 

Zahungscyn

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Amazing amazing parenting. Love to see a black child grow up financially set.
 

Mrs Clooney

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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.
 

SnipYoFlap

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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.

ETA......this is what i found when i googled 529 plans. its just a little paragraph on what i was speaking on.

  • However, if you decide to use the money for something other than qualified education expenses, you will have to pay income taxes plus a 10% penalty on the earnings.
 
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Mrs Clooney

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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.

You 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%
 
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Currv

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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.
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.
 

Currv

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You 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%
Thinking of opening one for my son who’s 10. Though I’d like for him to attend
 

Soul2Soul

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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'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.
 

Ashlyn89

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I love this! That little girl is going to have a nice head start in life! This is why education is so important
 

Sophia Home Now

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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.
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?
 

mollflanders

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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.

Her mother—who lest we forget—is also a financial advisor, likely also has her invested in an allocation which is more risky to start and which will become more bond heavy as the child nears adulthood, because that is what every financial advisor worth her/his salt does. So the market may continue on this trajectory and far exceed her projections (and brava if it does!). But more importantly, she is doing what great financial advisors do and using historically accurate projections with an average return of 8% to properly manage expectations. We personally typically use 7% for our own investments because I’m a wuss. But like the rest of the country, I have been pleasantly surprised to see our returns over the last decade or so. I won’t share exact numbers, because I would never, but suffice it to say, I think we are all doing far better than projected, yes? Yes. And that has been luck and this incredible market much more than anything else. That’s all I was saying.
 

LalaSharp

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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.
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.

My 401k has a forum where participants can list their picks on a board. It's sort of a personal contest but we can also see the rates of returns of the professional advisers on the board vs. the index funds, the age allocation funds and the individual contestants. The index funds and the individuals are sweeping the board.

One of my 1st post-college jobs was w/ a major brokerage firm. They don't have any special knowledge, Their interests are not aligned with clients and a lot of them lie. Obama tried to fix some of this w/ the fiduciary rule but Trump killed it. Elizabeth Warren is one of the best & most knowledgeable people to follow on investor/consumer protection issues.
 

Andmetoo

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I had a lot to say based on some of these short-sided, uninformed and hating ass responses, but I’m like let me just shut up and appreciate this article for what it is. Meanwhile, I’m looking ol’ girl up and seeing what she’s working with. I have a YT financial advisor we just hired this year, but would rather work with my own people. It’s hard to find when you live in a predominantly YT city.

Good for her family. Finance is all about projections in the best case scenarios and even then you want to be conservative. The market could collapse or some sh!t could pop off, but that’s why you diversify and ensure ALL your money isn’t in high risk accounts (such as the custodial savings account).
 

Cryeisha

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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? : unamused:

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?
 

Affairage

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Wait - she’s not nearly a millionaire?

what is this story then? Fairytales and fallacies?

Lol, mostly an ad for Mom's company :joy:

She is still providing great financial advice to parents on how to set their kids up for financial success, but that number was just to attract viewers in my opinion.
As of now, the portfolio is valued about 50K from what I understand...
 

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