Parents Confused Investing for Their Kids

“Or just me? 🤣 We’ve got a 2.5 yo and 10 month old and every other week I sit and calculate how much more I need to save before I can retire so that I don’t quit. I also have been tracking all my 529 contributions in a note on my phone, and seeing this has been helping too. It’s just so rough right now. The burn out is strong and I’m sitting at my laptop just grumbling out loud to myself feeling like the ultimate gremlin post daycare drop off with my giant coffee mug, mismatched outfit, and ridi”

“Does anyone have useful links to share with regard to planning a living inheritance / wealth sharing before death? I’ve got 2 kids (18,12). I’ve committed to funding IRA / 503(a) accounts for each kid as long as my wife and I are around. I’m aware of the 19k (38 total with wife) annual gifting but not quite sure I’m ready to commit to it just yet. If you know of successful inheritance structures that have worked well please share your anecdotes. submitted by /u/well-to-do-rando [link”

“Put it in a mix of accounts as 529s don’t cover travel expense, certain professional fees outside of uni, tutoring (at uni). I over-funded our 529.”

“It’s literally investing in SPYM which some of us were already doing. If you don’t know what SPYM it’s literally SPY but at a cheaper price per share since SPY is over $600 a share. I recommend SPYM to people looking to get started in index investing that don’t have much money to invest.”

“Its an investment account that the gov puts seed money for your baby and invests it into the sp500 and your child gets to access it whwn they are an adult.( somwhere between 250$ and 1k)”

“Hey all, to start off, my wife and i are 35 and have 2 kids, aged 4 and 2. We've gone through some significant changes over the past weeks. After entering the next phase of our employment journey, we have received a significant pay increase bringing our HHI to roughly 900k. Im looking to max our retirement account, which I calculated to be roughly 160k or so per year. My question is, what do I do with the rest and how much do I invest beyond that? I will make roughly 550k/year and plan or wo”

“Our strategy is to fund 529s to a target $100k to take advantage of the tax strategy. Separately we are funding regular brokerage accounts with less of a target in mind - more to dump cash gifts when they are really young + add some extra each year from our own funds. Sure $100k in a 529 at the tuition growth rates of the last 2 decades will not cover the full cost. But it at least hedge against uncertainty of college/higher education landscape much further on down the road, while still taking s”

“I honestly don’t think the psychology of the 529 is discussed enough. I have (maybe ignorantly) aggressively saved for my two kids (14/rising freshman and 12/rising 6th grader). We’ve hit some cool milestones and shared with our kids where they are with THEIR money. Here’s the psychological part (in my opinion): SO many people sit around the kitchen table taking about whether they can afford college AT ALL, much less “how much do we have saved?” Any savings set aside is a HUGE leg up to planning”

“That is the big part for me, allowing it to be transferred to someone else.”

“The way I look at it is that my education changed the entire trajectory of me and my future kids but I had to fund it since I dont come from much financially. So I am saving in a 529 now - and it helps that I get a (VA) tax benefit from it. So why not. And worse case scenario if it doesnt get used, I can move 35k into an IRA and use it for other family members and essentially gift it to them. Having money for education in a family (whether my kids or my niece/nephew) it is a win to me.”

I put into a 529 because the amount I put in up to 2,500 is tax deferred.

“This is what I did as well, I was waffling for so long before realizing there's no downside to just doing both.”

“529, hands down. The tax advantages alone should help convince you. I'm not saying you shouldn't invest for them, just don't make it all investments - which can lose money. 529s are about as safe as can be imagined.”

The 529 also has to be open for 12 or 15 years i think

“$25k for in state and state-based college? Kean in NJ for example is substantially cheaper than that and when people think expensive east coast it’s usually NJ/NYC”

“I agree with the "both" approach. The important thing is to get started. We decided on putting money into 529s with a goal of covering 4 years at an in-state school. Our outside investments were for college if needed, possibly paying down our mortgage (higher rate back then), or whatever else came up while our kids grew up. You can always make adjustments as you see how things evolve.”

“At a private school maybe? My state college was like $50k total with dorms for 2 years and off campus 2 years”

“Just wondering if there are any advantages or disadvantages for this. Thank you! submitted by /u/sunsetviewer [link] [comments]”

“Does anyone have any guidance or advice how best to budget for baby from birth through to 18 / where to put savings for a newborn to access when they turn 18? How much are we looking at yearly… I believe girls and more expensive… thank you guys. submitted by /u/ukmike92 [link] [comments]”

“My wife and I are planning on having kids in the near future and I would like to start investing for their future as soon as they’re born. I don’t necessarily know how the college landscape will look in the next few decades, so I’m torn on if I should invest in a 529 or regular investment account for them. In an ideal world, each kid (planning on having 2 kids) will have $100k in whatever investment account by the time each is 18, which should be sufficient to cover most of a 4 year college tuit”

“She is camp counselor and gets paid by a stipend debit card. We can only find online timesheets on the city website but nothing else. Can a 14 year old start an Ira with just that? It’s not enough where she needs to files her own tax return or does she just to create one? Or should I just put that money into her 529? submitted by /u/Yotone718 [link] [comments]”

“Our daughter is going to college this year and we have money in a 529 that will cover part of her first year. We are going to be funding part of our retirement into an account to pay for the remaining semesters. Should we keep funneling into the 529, keep in HYSA, put it in the market then just sell when we need to pay? Curious what other folks do. eDIT: I wasn't clear, we are not stopping our retirement fund in any way. What I meant was instead of funneling 100% of funds into retirement, we”

“My husband and I were talking about this and I wanted to ask the parents of Reddit what you guys have done. We have one young toddler and another baby on the way so this conversation won’t happen for many years, but I was wondering if parents of older children and teens have shared their salaries with their kids and if so how did you do it? If not, why didn’t you? This came about because a sibling decided to share their salary with the whole extended family and my FIL was shocked, saying this wa”

“UTMA for the things you want them to use the funds for. Invest in a total stock index fund and let it cook.”

“260k? Think long term. Even with the IRA rollovers and whatever you might be able to pull otherwise, that 529 can be moved to another related beneficiary. For the 529s we set up for our kids, the plan all along was to redirect them to our grandkids.”

“Simplest choice: open a 529 Plan for her future education and purchase a broad ETF (like VTI) and watch it grow.”

“I did this while pregnant and switched it to my child after they were born. It was super easy in the app for my states 529. Technically it was opening a new account with my child’s name as the beneficiary and rolling over the funds and closing my account but the system did all this in the back end, I just had to request the change.”

“Teach her to save at least 10% of everything she makes. More if she's willing. Teach her about the power of compounding and starting early. She can open a ROTH IRA if she's working and earning money. There her savings will compound tax free. You may need to be the custodian until she's 18. It will help her to understand saving and investing in herself at a very early age. My teens all did this and their Roth's have grown 6X from the original investments they deposited from ages 1”

“Which option do you think would be best? I’m asking if I should but the 4k in a HYSA OR CD or use it to pay their school fees and open a cd for them later.”

“Open a Teen Investing Account as well as a checking account. Even if she only puts $25/paycheck into the teen account, she can learn to invest. She’ll make mistakes and lose money, but she’ll also learn, and what a better time to do it than when she’s young and doesn’t need the money?”

“This was the range that we were thinking of, but does that include annual fund + spring auction or just annual fund? If just annual fund, how much should we budget for spring auction? (Money is drawn from a trust and I have an upcoming meeting on this topic)”

“Qualified expenses for a 529 or 530 include a considerable amount of stuff not on the 1098-T. Don't forget books, supplies, software, a new laptop if she needs one. We keep a giant pile of receipts, per kid. Safety glasses for Chem lab? That counts. Normally the scheme is to get as much out as we can, other than preserving $2000 in cash for tuition for the AOTC (if qualified)”

“If it's already in a fund, the only thing to do is switch funds if you're not happy with the one preselected, but there's no risk that it won't be invested somehow”

“You can also now use it for high school tutoring, IIRC. Private school tuition. Check the rules of your plan. And that's way, way more than you'll need for college.”

Open a Roth IRA too. Half goes in there.

“High yield savings account and Roth are good options. If you are feeling a little zesty, you can start to have her "pay you rent" so she learns about bills and budgeting, and you take whatever she plays you and place it into one of these accounts while she saves her money elsewhere. And then you return it to her when she's ready to move out or buy a home etc”

“Maybe help her open a RothIRA and explain investing and index funds to her? And some simple spreadsheet formulas. A money market account with a brokerage like Fidelity is a lot like a checking account. They'll even send you checks. And the returns are a lot more than the paltry interest rate you'd get with a checking account. No brick and mortar locations to go to, though. You'll need that checking account with a bank if either of you ever want to deposit cash (and then transfer it t”

“From stuff I've read/called around, I'm assuming 40k/year on just daycare (I'm in NYC... 40K is... on the low end, I see 5K+/month regularly) + 10K/year on food + clothes+ diapers + all other perishable goods like toys and whatnots, Additionally a start up cost for crib, stroller, car seats, baby proofing the house, and any medical bill(s) I mean... I hope they're not expensive but I'm expecting it to be pretty pricey”

“Ownership transfers don't reset the 15-year clock — the account age is tied to when it was opened, not who owns it.”

“The way that OP phrased the post suggests that there are no RMDs, and instead the Roth IRA is subject to the 10-year rule. The optimal strategy is to wait until the end of the 10th year to maximize the amount of tax-free compounding.”

Read up on how and what a 529 can be used and what you can pay with it.

“My aunt started a 529 college savings plan for me when I was young, but I graduated high school 5 years ago and don’t plan on enrolling in college anymore. However, I would like to take a course for fun at my local community college. One of the course requirements is you must have a laptop (I don’t own one). I was wondering if I would be able to use my savings to buy the laptop for the course, even if I’m not fully enrolled/ going to get a degree. This would be the only course I’m taking, and it”

“I'm looking for a little advice about a relatively small decision. I hope this is allowed. My daughter is almost 4, and over the past few years, through birthdays and Christmases, has amassed a collection of piggy banks. At first they just decorated the shelves, but then I decided to start putting all of the change from my tips in them. So far we've filled up three. My initial thought was to save them until she turned 18, and then on her 18th birthday she'd get to open up a ton of pi”

“My daughter is 14 (15 this fall). I'm considering opening a Trump Account (530A) with 100% VTI, and contributing the $5k max for each of the three years left (so $15k total). On Jan 1 of the year she turns 18 it becomes a regular traditional IRA. The plan is to then convert it to a Roth, keep it in VTI, and hopefully she keeps contributing from her own earned income. Anything I'm missing? Seems like an easy way to give her Roth IRA a $15k boost. (Aware of the kiddie tax on the conversion”

“I am 30, wife is 29, we have a son who is turning 1 this month. We don't know anything about personal finance and we want to figure out what we should be doing with our money, how it should be invested, what types of accounts to have and so on. Basic overview: We both own our cars and don't have car payments. No student loans or anything. We have no forms of debt apart from our mortgage. Wife has a 401k through work, I've got no kind of retirement account. We have roughly 40k sitting”

“I had a son at a very young age who was adopted. At the time, I signed away parental rights. I have a 529 I started for my future kids a long time ago that I never used, and now I don’t have kids of my own at college age. Can I use my 529 to help pay for my biological son’s college, even though I signed away my parental rights? Thanks submitted by /u/tdave22 [link] [comments]”

“Hi Everybody, My wife and I are trying to figure out when we consider the 529's fully funded and to switch saving that amount to a brokerage account. We have two kids one starting 4th and one starting Kindergarten this fall. We plan to fund their undergrad for wherever they want to go, and have a lot already saved in their 529s and are currently contributing to it monthly. Given that we don't know where they're going to want to go to college and there obviously is a difference betwee”

“Now consider the alternative: you invest 90k in a brokerage, and only pay capital gains at lower rate.”

“Second paying childcare right now into this investment account. You make $220k you should be able to find and or be saving more than $2.5k/mo. My HHI is $175k and we invest $3k+/mo in a brokerage after maxing 401k and HSA.”

“That’s fantastic! However our spending is higher and our basis is similar and our spending will be peak when we retire since kids will still be young (planning for 4x private schools and unsubsidized healthcare for 6). At the end of the day tax decisions happen at the margin and I don’t see any way of keeping the cap gains under 100k without Roth unless we do every other year large withdrawals which we will run the numbers and consider. Roth becomes a powerful tool in this case.”

“But OP can do the 530A accounts now and still gift from taxable when they are adults. It’s not an either/or.”

“You mention you don’t want to gift your children unrestricted money at 18. A Trump account becomes theirs at 18 and they can do whatever they want with it. There are adverse tax consequences but no restrictions that prevent them from cashing out.”

“529 doesn’t get the job done, you have to wait til they get their first job. And instead of a UTMA you can do what I’m doing. I have opened a taxable brokerage under my name that I’m earmarking for my child. I contribute weekly, auto invests. It’ll pass to him with my trust and he’ll get full step up in basis at that time.”

“Your child is considered tax independent as soon as they 1. Have earned income. 2. That earned income is more that 50% of their living expenses. Living expenses includes college tuition, room, board, medical insurance etc. Yes, a child that is no longer a full time student, is full time employed and that employment income is covering more than 50% of their expenses can no longer be claimed as a dependent on your taxes.”

“Unfortunately I only earn W2 income so there's no way to contribute to a conventional Roth IRA for my child since we do not have earned income. If your kid has earned income, you can gift them cash to contribute to their Roth IRA. Where that money came from makes no difference. It is your kid that needs the earned income.”

“I plan on passing the excess to my grandkids and creating a tax advantaged dynastic fund. I am not concerned about overfunding my 529 and might aggressively overfund it.”

“I currently have young kids. My youngest was eligible for the $1000 seed to their 530A account, however the more I've looked into these accounts, the more excited I am and I plan on maxing them out for my kids along with any future kids we have. Has anyone else looked into these accounts? Am I missing anything? I plan on contributing $5000 a year for 18 years, meaning I'll contribute $90k over their lifetime and the account will be worth $250k at 18 assuming 10% growth. At 18 the 530A ac”

“Question about funding/gifting 529 funds. I "super funded" both my kids 50k when they were born to their 529 respectively. I understand that I can't make any additional contributions for the next 5 years less it start counting towards my lifetime gift max. During this 5 year freeze, can I find my own 529 (in my name) and then roll it over to them after 5 years are up for my next "Superfund"? Thanks update: sounds like I misunderstood the superfunding rules. I thought irre”

“We have kids 16/13/11. We have about $70k in 529 thus far and I would like to supercharge it. Beyond 401k and Roth we have a bit of cash and some stock. We have some Truist Bank stock that is not very exciting. Hasn't done much over the years and dividend reinvestment is meh too. Its $37k worth. I was thinking about dumping that stock, paying the long term gains, and putting the rest into the 529 to give it a mid jump start. We contribute monthly but not enough and can't really afford to”