Kid is interested in investing

[McDoodles]

We've got a 12 year old boy interested in making/saving/investing moola. We've made him read some books (Simple plan to wealth and how to turn $100 into a million).

He currently has his cash under the mattress. the pile is getting bigger and we need help.

He has $1500 CASH accumulated from Christmas, birthdays, and chores.

Over spring break, we plan to sit down and open a local bank account at the credit union.
I feel he should also have an interest bearing online account like Ally to move money eletronically.

I would like to set something up for him at Vanguard. thoughts?

[jeninco]

Setting up a custodial account at Vanguard is no big deal -- it needs to be in your name (or your partners) as an UTMA account or something until the kid turns 18, or 21, depending on your state.  I have pointed out to my kids that trying to "pick stocks" is sort of like gambling, and the safer thing to do is to buy into an index fund -- you and your kid may want to learn more about that before you let him go off. We agreed that some small amount of their money is theirs to gamble with, but the majority of it should be someplace fairly safe.

Does he do anything to earn his own money? That amount can go into a Roth IRA. I think Vanguard has those too, or perhaps it's Fidelity. I can never remember!

[cool7hand]

What rules, boundaries, and limitations fit your family?

[MDM]

Does he do anything to earn his own money? That amount can go into a Roth IRA. I think Vanguard has those too, or perhaps it's Fidelity. I can never remember!

Great idea.  Fidelity, Schwab, and Vanguard all do custodial Roth IRAs.  Using the word "custodial" will help steer the discussion to the right place.

[Chris Pascale]

Happy to read this. I start my kids with a Roth at $25/month with their first job at 14. Before that, it's just savings, but they did once buy a 12-month CD. A month later one of them wanted to buy new bedding, but her cash was tied up, so we set up a plan for her to earn the money, and by the time she did, she realized she'd rather have the cash.