Investing for your kids…
Question: I am in need of some advice. I have a 5 and 7 year old and I need to start investing for their education. I have heard many things… mutual fund, bonds, etc. Custodial accounts, Guardian accounts, etc.
What is a good approach? I am thinking a no-load mutual fund and making monthly payments between $50-$100.
I know there are tax advantages for setting up a custodial account, but something tells me I want to be in control of the money and own it. Is the tax break really worth it?
Is this smart? Any other ideas or advice would be very appreicated. Feeling kind of lost.
Answer: Yes, for the no-load funds. Go to the various fund finders on the www and find some funds to start a portfolio. Go to the library and read. It’s also never to earlly to start telling the kids what daddy is doing- could be the most important part of their education. Never to earlly to learn about Capitolism. In the late ’70’s there were college students using the then low interest student loans to buy gold futures- they left college ready to retire. Raise smart kids. Couple of choices. You can buy stock index funds, they have almost no turnover and so you get almost no realized gains. You may get a dividend distribution but it should be fairly small.
The other alternative is to check into no-load annuities. These are offered by Vanguard, T. Rowe Price, and Fidelity to name three. Be sure you understand what you are buying before you buy.
If you are self-employed, you also open up more choices.
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