Author Topic: Vanguard investing for kids  (Read 5417 times)

albijaji

  • 5 O'Clock Shadow
  • *
  • Posts: 48
Vanguard investing for kids
« on: December 24, 2017, 03:25:49 PM »
i have a question about investing for my kids
i have $1000 each to start a fund
i would invest in what i am investing but I have admiral shares and they start at 3k each..
i dont have that kind of money now ($6000 for both kids)..
does anybody know , or can anybody advise me what they invested in with less than 3k
i was looking at the VTI and VFIFX which i think i can invest with less than 3k

thanks for any input/help/food for thought..

AdrianC

  • Handlebar Stache
  • *****
  • Posts: 1116
  • Location: Cincinnati
Re: Vanguard investing for kids
« Reply #1 on: December 24, 2017, 03:54:26 PM »
We have accounts for the kids at Vanguard. VTI, VEA, VWO. If I were to do it again I think I'd just go with VT. Commission free. Auto dividend reinvestment.

MDM

  • Senior Mustachian
  • ********
  • Posts: 10288
Re: Vanguard investing for kids
« Reply #2 on: December 24, 2017, 04:01:18 PM »
A target date fund such as VTTSX has a $1K minimum.

anxiousclothing

  • 5 O'Clock Shadow
  • *
  • Posts: 21
Re: Vanguard investing for kids
« Reply #3 on: December 24, 2017, 09:45:33 PM »
We have accounts for the kids at Vanguard. VTI, VEA, VWO. If I were to do it again I think I'd just go with VT. Commission free. Auto dividend reinvestment.

Did you open the accounts in their name? I have 4 kids that currently only have 0.1% savings account and am thinking about opening a Vanguard account for them but don’t really know best route.

albijaji

  • 5 O'Clock Shadow
  • *
  • Posts: 48
Re: Vanguard investing for kids
« Reply #4 on: December 25, 2017, 11:56:41 AM »
We have accounts for the kids at Vanguard. VTI, VEA, VWO. If I were to do it again I think I'd just go with VT. Commission free. Auto dividend reinvestment.

Did you open the accounts in their name? I have 4 kids that currently only have 0.1% savings account and am thinking about opening a Vanguard account for them but donít really know best route.

you can open an account for minor under your account (thats how i understand it when the rep explained it on the phone.. she sent me the paperwork too, which i haven't even looked at to be honest)

albijaji

  • 5 O'Clock Shadow
  • *
  • Posts: 48
Re: Vanguard investing for kids
« Reply #5 on: December 25, 2017, 11:59:17 AM »
We have accounts for the kids at Vanguard. VTI, VEA, VWO. If I were to do it again I think I'd just go with VT. Commission free. Auto dividend reinvestment.

thats good to know.. thank you for your input

Yankuba

  • Handlebar Stache
  • *****
  • Posts: 1357
  • Location: Long Island, NY
Re: Vanguard investing for kids
« Reply #6 on: December 25, 2017, 11:59:38 AM »
Posting to follow

Aunt Petunia

  • Handlebar Stache
  • *****
  • Posts: 1222
Re: Vanguard investing for kids
« Reply #7 on: December 25, 2017, 12:16:59 PM »
If you have $3000 total, you could start a fund for oldest kid this year, next kid next year, etc. Oldest has less time for it to compound before college or whatever.

secondcor521

  • Magnum Stache
  • ******
  • Posts: 3063
  • Age: 51
  • Location: Boise, Idaho
  • Big cattle, no hat.
    • Age of Eon - Overwatch player videos
Re: Vanguard investing for kids
« Reply #8 on: December 25, 2017, 12:39:36 PM »
This will muddy the waters a bit, but:

I have had most of my investments at Vanguard for a long time (over 30 years) and they are very good for my needs.  But when I got to investing for my kids, I discovered that Vanguard doesn't really cater to small accounts just starting out.

I looked around, wanting to find a place where my kids could open Roth IRAs with low initial investments, zero to low fees and was a place I felt I could trust for the long term.

My kids ended up with their Roth IRA accounts at Schwab.

I was thinking that when their accounts got big enough they could move them to Vanguard to save money on fees, but now with Schwab being so competitive on fees, it really won't make sense for them to move their money for a long time, if ever.

anxiousclothing

  • 5 O'Clock Shadow
  • *
  • Posts: 21
Re: Vanguard investing for kids
« Reply #9 on: December 25, 2017, 03:31:41 PM »
This will muddy the waters a bit, but:

I have had most of my investments at Vanguard for a long time (over 30 years) and they are very good for my needs.  But when I got to investing for my kids, I discovered that Vanguard doesn't really cater to small accounts just starting out.

I looked around, wanting to find a place where my kids could open Roth IRAs with low initial investments, zero to low fees and was a place I felt I could trust for the long term.

My kids ended up with their Roth IRA accounts at Schwab.

I was thinking that when their accounts got big enough they could move them to Vanguard to save money on fees, but now with Schwab being so competitive on fees, it really won't make sense for them to move their money for a long time, if ever.

I’d like to open Roth IRAs for my kids but they are all under 9 years old and aren’t close enough to “have a job”. I don’t know a work around for that.

Should I just open a taxable account for them? Input and feedback would be greatly appreciated.

secondcor521

  • Magnum Stache
  • ******
  • Posts: 3063
  • Age: 51
  • Location: Boise, Idaho
  • Big cattle, no hat.
    • Age of Eon - Overwatch player videos
Re: Vanguard investing for kids
« Reply #10 on: December 25, 2017, 03:57:45 PM »
This will muddy the waters a bit, but:

I have had most of my investments at Vanguard for a long time (over 30 years) and they are very good for my needs.  But when I got to investing for my kids, I discovered that Vanguard doesn't really cater to small accounts just starting out.

I looked around, wanting to find a place where my kids could open Roth IRAs with low initial investments, zero to low fees and was a place I felt I could trust for the long term.

My kids ended up with their Roth IRA accounts at Schwab.

I was thinking that when their accounts got big enough they could move them to Vanguard to save money on fees, but now with Schwab being so competitive on fees, it really won't make sense for them to move their money for a long time, if ever.

Iíd like to open Roth IRAs for my kids but they are all under 9 years old and arenít close enough to ďhave a jobĒ. I donít know a work around for that.

Should I just open a taxable account for them? Input and feedback would be greatly appreciated.

Taxable accounts are good too.  But any earned income counts for Roth contributions.  For example, I pay my daughter to pet-sit my cat for me when I'm on vacation.  I pay her what the vet would charge, my cat is happier being at home rather than in a strange environment, and she has earned income that qualifies her for a Roth contribution.  Below a certain amount (I don't recall what it is offhand - $400?  $600?), neither income nor FICA taxes are due.

My older son had summer jobs this year landscaping and car detailing, so those earnings count too.

It's harder with younger kids, but even money earned from household chores would count as far as I understand things.

Another thought would be to open taxable accounts for them now and then when they are teenagers with higher paying jobs, liquidate some of the taxable accounts to make the Roth contribution.  For example, earn $2K from a summer job, put that $2K in their pockets, sell $2K of the taxable and use those proceeds to fund the Roth.  Perfectly legal.

AdrianC

  • Handlebar Stache
  • *****
  • Posts: 1116
  • Location: Cincinnati
Re: Vanguard investing for kids
« Reply #11 on: December 25, 2017, 04:17:10 PM »
We have accounts for the kids at Vanguard. VTI, VEA, VWO. If I were to do it again I think I'd just go with VT. Commission free. Auto dividend reinvestment.

Did you open the accounts in their name? I have 4 kids that currently only have 0.1% savings account and am thinking about opening a Vanguard account for them but donít really know best route.

Yes. We have a UTMA account for each of them.

albijaji

  • 5 O'Clock Shadow
  • *
  • Posts: 48
Re: Vanguard investing for kids
« Reply #12 on: December 31, 2017, 03:37:01 PM »
We have accounts for the kids at Vanguard. VTI, VEA, VWO. If I were to do it again I think I'd just go with VT. Commission free. Auto dividend reinvestment.

Did you open the accounts in their name? I have 4 kids that currently only have 0.1% savings account and am thinking about opening a Vanguard account for them but donít really know best route.

Yes. We have a UTMA account for each of them.

i am just filling out the utma form and nowhere do i see where to put the childs name in.. or is it just in my name

ZMonet

  • Stubble
  • **
  • Posts: 210
Re: Vanguard investing for kids
« Reply #13 on: December 31, 2017, 06:12:08 PM »
My understanding is that household chores done by the child won't qualify as earned income for the purpose of putting money into a Roth IRA.  From what I read, it sounded like it was really best for the child to make money through a business (even your own-- unfortunately I don't have one) or paid by some other 3rd party.  It was also noted that for things like babysitting and lawn mowing that the income should be well documented in case there was ever an IRS challenge.  I wish it was otherwise as I'd love to have my 8 year old start a Roth but I just don't think there are any income opportunities.  If anyone sees it differently -- that household chores or yard work count -- I'd love to be convinced differently.

harvestbook

  • Stubble
  • **
  • Posts: 203
Re: Vanguard investing for kids
« Reply #14 on: January 02, 2018, 05:17:13 PM »
You can start a UTMA with a target date fund in a taxable ($1K) minimum and let it build until you can buy other funds. I did this as a backup college fund and when daughter started working, started a Roth with the same strategy by matching her income. Now I am selling out of the taxable and moving it to the Roth as she earns and her 529/college picture gets clearer. I'll adjust when she starts college in the fall, but I figure this is a good financial education, and you can't beat an early Roth.

Invest early and often.

(The guidance on what counts as income is a little sketchy--seems to be a case-by-case judgment call. Make sure you document everything.)

AdrianC

  • Handlebar Stache
  • *****
  • Posts: 1116
  • Location: Cincinnati
Re: Vanguard investing for kids
« Reply #15 on: January 03, 2018, 06:00:23 AM »
We have accounts for the kids at Vanguard. VTI, VEA, VWO. If I were to do it again I think I'd just go with VT. Commission free. Auto dividend reinvestment.

Did you open the accounts in their name? I have 4 kids that currently only have 0.1% savings account and am thinking about opening a Vanguard account for them but donít really know best route.

Yes. We have a UTMA account for each of them.

i am just filling out the utma form and nowhere do i see where to put the childs name in.. or is it just in my name

Mrs. C. did the paperwork. She says she remembers there being a place on the form for the kid's name and ours. The accounts are with Vanguard. They show up as:

[Kid's Name], [Wife's Name] CustóUTMA Brokerage Account