Author Topic: Investing $1000 for new great grand daughter (my great niece)  (Read 1344 times)

geekette

  • Handlebar Stache
  • *****
  • Posts: 2025
Investing $1000 for new great grand daughter (my great niece)
« on: October 31, 2017, 08:06:16 PM »
My mother wants to invest $1000 for her new great grand daughter (for college or whatever).

Other than Vanguard Star Fund (VGSTX), there don't seem to be any mutual funds at Vanguard or Fidelity with less than a $2500-$3000 minimum.  If she buys an ETF, it's only whole shares and no automatic reinvestment, correct?  Does the rest just hang out in a money market fund until someone notices and reinvests?

I also think there will be a $20/year fee for low accounts at Vanguard.

The first GG child got McD stock, but I don't think they do the free DRIP anymore, and she wants to do something different anyway.  Ideas?

stashing_it

  • Stubble
  • **
  • Posts: 143
Re: Investing $1000 for new great grand daughter (my great niece)
« Reply #1 on: October 31, 2017, 08:55:14 PM »
I'm almost positive that ETFs or individual stocks reinvest.   There is an option to select for each investment on whether to reinvest dividends. 

I still have a few individual stocks, and I just consolidated them to Vanguard.  It defaulted to reinvesting dividends, so I have things like 20.37 shares of various individual stocks before I noticed it and had them just roll into cash

I think you'd be fine buying VTI and turning on reinvested dividends.  Even if you could only do whole shares (which I don't think is true), there is no fee for trading vanguard funds or ETFs, so you could just roll it in once a year, or whatever made sense.

Even if you get $3000, you're better off with VTI (ETF) than VTSMX (investor class shares) because VTI has an expense ratio of .04 vs .15 for VTSMX.   VTSAX (admiral shares) also have an expense ratio of .04

I'm don't know about the $20 fee for accounts under a certain balance

Car Jack

  • Handlebar Stache
  • *****
  • Posts: 1682
Re: Investing $1000 for new great grand daughter (my great niece)
« Reply #2 on: November 01, 2017, 10:42:40 AM »
Schwab?  You can open with $100 and buy ETFs that are cheaper than Fidelity which is cheaper than Vanguard.  TDAmeritrade where you can sign up for no transaction fee ETFs and have no minimum.  I set up a Roth at TDA with $151 three or four years ago.  Never made any further deposits.

Alternately, how about a 529?  Potentially get a state deduction on income tax.

GGNoob

  • Pencil Stache
  • ****
  • Posts: 726
  • Age: 33
  • Location: Colorado
Re: Investing $1000 for new great grand daughter (my great niece)
« Reply #3 on: November 01, 2017, 01:06:33 PM »
Schwab's Target Date Index Funds are the lowest around at 0.08% with a $1 minimum investment. Check this out: http://www.schwab.wallst.com/schwab/Prospect/research/mutualfunds/summary.asp?symbol=SWYNX