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Author Topic: Vanguard for a minor?  (Read 2298 times)

Harper

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Vanguard for a minor?
« on: September 02, 2018, 12:49:29 PM »
Hi

My son is 13yo and quite the saver. He has 1K that he’d like to put in mutual fund. What’s the best way to do this without affecting financial aid/etc.

Thanks!
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sol

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Re: Vanguard for a minor?
« Reply #1 on: September 02, 2018, 12:54:07 PM »
If he has earned income (and has thus paid FICA taxes), putting it into a Roth IRA would shield it from financial aid assessments.

If he doesn't have earned income, and he's just been saving gifts like birthday money, then the options are more limited. 
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Trifle

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Re: Vanguard for a minor?
« Reply #2 on: September 02, 2018, 01:02:19 PM »
Agree -- Roth IRA is the way to go if he has earned income. I believe those are non-reportable for financial aid purposes.

If you can't do an IRA, then your next best choice is probably a custodial account. 

Vanguard has some funds (Target Retirement and Star) that have the $1000 minimum, but the rest have $3000/$10,000 minimums.  Vanguard does not cut custodial accounts any slack on the minimums -- it's still $1k/$3k/$10k.  Schwab does -- you can do a custodial account there and get into any of their index funds with $100.  Their index funds also have nice low fees -- many in the .03 - .04% range.  Not sure about Fidelity and their minor funds.
« Last Edit: September 03, 2018, 03:38:09 AM by Trifele »
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MDM

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Re: Vanguard for a minor?
« Reply #3 on: September 02, 2018, 02:20:17 PM »
Quote from: Trifele on September 02, 2018, 01:02:19 PM
...you can do a custodial account there....
"Custodial" is the magic word that unlocks lower minimums at most of the usually recommended places: Fidelity, Schwab, Vanguard, etc.

See http://forum.mrmoneymustache.com/investor-alley/where-to-start-a-child's-roth-ira-with-very-low-income for related discussion.
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mozar

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Re: Vanguard for a minor?
« Reply #4 on: September 02, 2018, 05:39:38 PM »
I went with Shwab custodial account for my sister. I think I went with a total stock index mutual fund.
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Harper

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Re: Vanguard for a minor?
« Reply #5 on: September 04, 2018, 06:11:03 AM »
Thank you for your replies.

The cash is birthday money, etc so no IRA yet.  So it looks like I will do a custodial account.  I will take the hit on the taxes but it will roll to him once he's 18? 
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Trifle

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Re: Vanguard for a minor?
« Reply #6 on: September 04, 2018, 06:52:04 AM »
Quote from: Harper on September 04, 2018, 06:11:03 AM
Thank you for your replies.

The cash is birthday money, etc so no IRA yet.  So it looks like I will do a custodial account.  I will take the hit on the taxes but it will roll to him once he's 18?

It depends on the type of account and the state you are in -- https://www.thebalance.com/beginners-guide-to-ugma-and-utma-custodial-accounts-4060475
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