The Money Mustache Community
Learning, Sharing, and Teaching => Investor Alley => Topic started by: CG6152011 on September 05, 2017, 10:14:54 AM
-
Each of my children have benefited from a generous family member, $3000 given at birth. My 2 oldest are 4 and 2 and just had our 3rd last month. I have had the older 2 invested in an UTMA with fidelity, FMEIX. Opinions on, should I continue the same path with number 3 in the same fund? Is it worth switching funds for the older 2 as well? Thanks!
-
What do you hope to achieve by switching funds and/or investment vehicle?
-
I read this article a couple years ago. http://paulmerriman.com/make-your-kid-rich-for-1-a-day/
As a result, we plan on putting $5k into https://personal.vanguard.com/us/funds/snapshot?FundId=0628&FundIntExt=INT, not VBR (I think world market is going to mature more than small caps), the first market day after our future children are born.
We probably won't tell them about it until they get married, then will suggest they hold on to it, but we also plan to teach them how to save their own.
-
I read this article a couple years ago. http://paulmerriman.com/make-your-kid-rich-for-1-a-day/
As a result, we plan on putting $5k into https://personal.vanguard.com/us/funds/snapshot?FundId=0628&FundIntExt=INT, not VBR (I think world market is going to mature more than small caps), the first market day after our future children are born.
Even though you aren't using small cap value just an FYI Merriman suggests VIOV not VBR for Vanguard now. The old article states VTWV but he had that over VBR back then.
Included is the newer article and podcast.
http://paulmerriman.com/turn-3000-50-million/
-
Thanks for the update.
-
As a result, we plan on putting $5k into https://personal.vanguard.com/us/funds/snapshot?FundId=0628&FundIntExt=INT, not VBR (I think world market is going to mature more than small caps), the first market day after our future children are born.
Granddad gave us money to invest for each of our kids. I put it into a diversified portfolio of ETFs (US, International, Emerging Markets, etc). I can't easily change now 'cos they'd get hit with cap gains. If I had to do it over I'd go with Vanguard Total World Stock Index VTWSX/VT. Globally diversified, simple, no rebalancing needed.
-
As a result, we plan on putting $5k into https://personal.vanguard.com/us/funds/snapshot?FundId=0628&FundIntExt=INT, not VBR (I think world market is going to mature more than small caps), the first market day after our future children are born.
Granddad gave us money to invest for each of our kids. I put it into a diversified portfolio of ETFs (US, International, Emerging Markets, etc). I can't easily change now 'cos they'd get hit with cap gains. If I had to do it over I'd go with Vanguard Total World Stock Index VTWSX/VT. Globally diversified, simple, no rebalancing needed.
Precisely my thinking. Plus, if I do an ETF for the cheaper fund fee I have to buy whole shares instead of $5k. Eventually the 5k will double and be eligible for Admiral shares.
-
ptf
-
If you think the kid is college bound, the Vanguard Nevada 529 plan agressive allocation is a good choice. Or whatever your state has if it is a better deal in your state.
What is so special about FMEIX? Why not IJH, IVOV, VOE, VO, (or the mutual fund equivalents VMVIX, VIMSX) or any of a number of other funds? With an expense ratio of 0.59, the most likely outcome is that FMEIX will end up 0.5% behind them +/- 1% annualized.
-
I read this article a couple years ago. http://paulmerriman.com/make-your-kid-rich-for-1-a-day/
As a result, we plan on putting $5k into https://personal.vanguard.com/us/funds/snapshot?FundId=0628&FundIntExt=INT, not VBR (I think world market is going to mature more than small caps), the first market day after our future children are born.
We probably won't tell them about it until they get married, then will suggest they hold on to it, but we also plan to teach them how to save their own.
lol depending where you live, or if there is pre-nup, I would give him the day BEFORE he gets married so its 100% to him (except future growth gains) instead of belonging to the "couple" from day 1 : )
-
Suppose you give a newborn $3,000, and zHe gets married at age 28.
It's only going to be about $50,000 then.
Is that really worth getting all antsy about a pre-nup then?
-
Any advice on particular places to hold money for a newborn? In your name or the child's? 529 or taxable account (since IRA can only help them if they have income)?
-
Any advice on particular places to hold money for a newborn? In your name or the child's? 529 or taxable account (since IRA can only help them if they have income)?
529 offer creditor protections that your regular taxable account doesn't. That's where I would stick it.
-
Any advice on particular places to hold money for a newborn? In your name or the child's? 529 or taxable account (since IRA can only help them if they have income)?
529 offer creditor protections that your regular taxable account doesn't. That's where I would stick it.
But what about a taxable account in the child's name? It's not like the as an infant is going to get sued any time soon and the negatives of the 529 are pretty huge. The big one being, no spending on non-education which to me is a huge disincentive to apply for scholarships or go to a cheaper school and use the account as money for a down payment.
-
Any advice on particular places to hold money for a newborn? In your name or the child's? 529 or taxable account (since IRA can only help them if they have income)?
529 offer creditor protections that your regular taxable account doesn't. That's where I would stick it.
But what about a taxable account in the child's name? It's not like the as an infant is going to get sued any time soon and the negatives of the 529 are pretty huge. The big one being, no spending on non-education which to me is a huge disincentive to apply for scholarships or go to a cheaper school and use the account as money for a down payment.
You need to be 18 years old to open a brokerage account.
The alternative is a UTMA/UGMA, but those come with a boatload of caveats.
-
Any advice on particular places to hold money for a newborn? In your name or the child's? 529 or taxable account (since IRA can only help them if they have income)?
529 offer creditor protections that your regular taxable account doesn't. That's where I would stick it.
But what about a taxable account in the child's name? It's not like the as an infant is going to get sued any time soon and the negatives of the 529 are pretty huge. The big one being, no spending on non-education which to me is a huge disincentive to apply for scholarships or go to a cheaper school and use the account as money for a down payment.
"No spending on non-education" is as accurate of a descriptor of 529 rules as "no spending prior to 59½" is an accurate descriptor of IRA rules.
Your kid can take this money out at any time for any reason...they'll just have to pay a bit of tax on the growth if it wasn't used for education.
In general an UTMA will incur less tax if withdrawn for non-educational purposes than a 529, but a 529 is better if used for education. Weigh the odds of this particular kid needing the money for college or not when deciding which vehicle to choose. If you end up choosing wrong, it's not the end of the world either way.