Maybe this personal example will help, even though it involves an IRA investment. (For a child there's unlikely to be any tax until they begin earning income at age 22.)
Long ago I had a business, which, for one brief period, did well enough for me to put $2,500 into an IRA with T. Rowe Price Co. I put the money in their best available long term growth fund. My intention was to make a similar deposit each year - the business had other ideas and there was nothing to add to the IRA. It sat exactly as administered by Price with all proceeds and dividends reinvested. In 20 years the balance was almost $100,000. At present the balance is over $250,000 - and that is after required distributions and a couple of other withdrawals. (The fund was closed to new investors years ago.)
If a parent is investing for a child's long-term financial security, you must avoid direct ownership of real estate, so-called investment property, and anything that requires the guardian to handle cash, or make decisions for a future they cannot predict or control. Look for maximum long-term growth, liquidity, stability with low overhead and/or fees. For the next 20 years do not try to "manage" the minor's assets in this fund - most have neither time, talent, nor knowledge to be successful.
[Disclaimer. I was a contributor to financial articles published in the Wall Street Journal several years ago to which T. Rowe Price also contributed.]
Put the money in a Zero fee/Zero commission ETF. I have 6 grandchildren and I have 6 Custodial accounts set up for each grandchild. You are the custodian and you can manage the account, however, and it is their money when they reach the age of majority. I would NOT put the money in a 529 plan. With the tax law changes in 2017 you should be able to keep from paying ANY Federal taxes until the grandchild or grandchildren reach majority. IF you put $350/year in a Zero fee/Zero commission ETF that has an annual yield of 6% by the time the child reaches 21 you will have ~ $13,997.45...
@MrEureka said:
I’m also in the equities camp. However, I’d also recommend buying the coolest looking antique “treasure chest” you can find, filling it with old circulated raw coins, and keeping it in a place where it will be seen at family get-togethers. Play it right and it could lead somewhere.
This. Equities, possibly in a college account. Do your research on the impact to financial aid first.
And a ‘treasure chest’ with some mystery surrounding it.
Someone in 25 years may look back and pick another investment that will do better, but by buying gold, you're guaranteeing yourself you will not lose anything against inflation and in 25 years a whole lot of inflation could happen.
"Gold is money, and nothing else" (JP Morgan, 1912)
"“Those who sacrifice liberty for security/safety deserve neither.“(Benjamin Franklin)
The problem with a 529 plan is not everyone goes to college. Most of my employees are basic high school grads, no college at all. Most are self taught techies who have at most certifications.
Nobody can predict what your granddaughter will want to do after high school. She might want to backpack through Europe instead of college; and for all anyone knows some nut may make college free in 18 years. So I wouldn't recommend a savings fund that is educational biased only but rather some monies set aside in an ETF fund (checking with a financial advisor if you have one first) that has the least tax implications possible. I would also buy a birth year mint or proof set and hold onto it for her until she is older. And a 1/10th gold eagle each year, again held for her until she is older when you can decide if such a set would be of interest.
I have no financial or stock advice to give you. But in lieu of the proof sets or ASE's, I'll suggest you will both get more out of buying a stuffed bunny rabbit and playing on the floor with her.
This is probably more than the OP ever cared to hear. Major non-numismatic post below:
In 1997, my wife and I had a kid, and the baby was my mother-in-law's first grandchild (long story). My wife and I were relatively old for first time parents.
We were given $10,000 by the new grandparents, and $1,000 from my parents (who had already had this happen in their lives eight times). We also had our own savings, of course.
Although it was a difficult decision, we chose to buy eight semesters of 529 prepaid college tuition when our kid was just three months old. The total cost was $12,200.
The decision was hard because I was very conscious of coins, precious metals, monetary history and because I was mostly aware of how much purchasing power the U.S. dollar had already lost in the 1970s and 1980s.
In about ten weeks, that child will graduate from a four year public university with a bachelors degree in Nursing. Our actual college expenses have been low and easy to meet from our usual cash flow. No loans have been required.
It is certainly possible that the world as we know it won't hold together for twenty more years (and that was my very great concern in 1997), but if investing in such a 529 prepaid college tuition plan does happen to work out, the relief that you will have when it comes time to pay the future college expenses will be almost indescribable.
TLDR: Old Bill damn near broke his arm patting himself on the back.
20+ years ago a co-worker had a daughter who he named Morgan. He had not heard of the Morgan dollars, but after I mentioned then to him, he ended up getting one from 100 years before she was born and gave it to her as a present.
Along those lines, I would get a nice coin of the same denomination from 1819, 1919, and 2019. Then if you want to do something annually, just invest in an index fund. Then I think you get the cool grandpa and then have some spending money come college time.
Lots of great ideas up there. It matters what your goals are...
Interacting with old Gramps and having a keepsake? How about the treasure chest and start a 'one from every country' set...low cost and can spend time together looking at maps and talking about faraway places. Or a Dansco 7070 and start adding 1-2 coins a year...when she gets older you can pick some out together.
A coin stash she can liquidate at will? A couple 1/10 gold eagles every year. Get a tube and start filling it. Someday she may want/need the stash and can sell for whatever. It's more fun than a bank or brokerage statement.
A brokerage or bank account for all of the above reasons. Give her a sound head about investing.
A 529 account--lots of variables including she may not go to college. The nice secret here is that the account belongs to YOU. If she doesn't do college then you can re-designate the beneficiary. Or, liquidate (with whatever tax penalty) and give her money to open her small business or whatever. It's nice because it's yours and she can't run off to Vegas and blow it on supporting a boyfriend's gambling habit like a gift trust.
A Treasury Direct account with savings bonds in an option too.
I like the idea above of a joint investing account with you/spouse/her as joint owners. Just because she is a joint owner doesn't mean she has to know about it .
Chocolate coins are always popular with children too.
Comments
Proof sets and silver eagles.
Sometimes, it’s better to be LUCKY than good. 🍀 🍺👍
My Full Walker Registry Set (1916-1947):
https://www.ngccoin.com/registry/competitive-sets/16292/
Food.
RE:
High dividend ETFs such as KBWD, MORL, or MRRL
far better investment choices exist than these.
Maybe this personal example will help, even though it involves an IRA investment. (For a child there's unlikely to be any tax until they begin earning income at age 22.)
Long ago I had a business, which, for one brief period, did well enough for me to put $2,500 into an IRA with T. Rowe Price Co. I put the money in their best available long term growth fund. My intention was to make a similar deposit each year - the business had other ideas and there was nothing to add to the IRA. It sat exactly as administered by Price with all proceeds and dividends reinvested. In 20 years the balance was almost $100,000. At present the balance is over $250,000 - and that is after required distributions and a couple of other withdrawals. (The fund was closed to new investors years ago.)
If a parent is investing for a child's long-term financial security, you must avoid direct ownership of real estate, so-called investment property, and anything that requires the guardian to handle cash, or make decisions for a future they cannot predict or control. Look for maximum long-term growth, liquidity, stability with low overhead and/or fees. For the next 20 years do not try to "manage" the minor's assets in this fund - most have neither time, talent, nor knowledge to be successful.
[Disclaimer. I was a contributor to financial articles published in the Wall Street Journal several years ago to which T. Rowe Price also contributed.]
Put the money in a Zero fee/Zero commission ETF. I have 6 grandchildren and I have 6 Custodial accounts set up for each grandchild. You are the custodian and you can manage the account, however, and it is their money when they reach the age of majority. I would NOT put the money in a 529 plan. With the tax law changes in 2017 you should be able to keep from paying ANY Federal taxes until the grandchild or grandchildren reach majority. IF you put $350/year in a Zero fee/Zero commission ETF that has an annual yield of 6% by the time the child reaches 21 you will have ~ $13,997.45...
This. Equities, possibly in a college account. Do your research on the impact to financial aid first.
And a ‘treasure chest’ with some mystery surrounding it.
Choice Numismatics www.ChoiceCoin.com
CN eBay
All of my collection is in a safe deposit box!
No other better gift for the long term then GOLD.
Someone in 25 years may look back and pick another investment that will do better, but by buying gold, you're guaranteeing yourself you will not lose anything against inflation and in 25 years a whole lot of inflation could happen.
"“Those who sacrifice liberty for security/safety deserve neither.“(Benjamin Franklin)
"I only golf on days that end in 'Y'" (DE59)
The problem with a 529 plan is not everyone goes to college. Most of my employees are basic high school grads, no college at all. Most are self taught techies who have at most certifications.
Somebody else said it first, "Gold is money, nothing else."
Open a custodial account and invest the money in a ETF that follows the S&P and reinvest the dividends.
it's crackers to slip a rozzer the dropsy in snide
Nobody can predict what your granddaughter will want to do after high school. She might want to backpack through Europe instead of college; and for all anyone knows some nut may make college free in 18 years. So I wouldn't recommend a savings fund that is educational biased only but rather some monies set aside in an ETF fund (checking with a financial advisor if you have one first) that has the least tax implications possible. I would also buy a birth year mint or proof set and hold onto it for her until she is older. And a 1/10th gold eagle each year, again held for her until she is older when you can decide if such a set would be of interest.
My Collection of Old Holders
Never a slave to one plastic brand will I ever be.
I have no financial or stock advice to give you. But in lieu of the proof sets or ASE's, I'll suggest you will both get more out of buying a stuffed bunny rabbit and playing on the floor with her.
LIBERTY SEATED DIMES WITH MAJOR VARIETIES CIRCULATION STRIKES (1837-1891) digital album
A gold buffalo each year.
This is probably more than the OP ever cared to hear. Major non-numismatic post below:
In 1997, my wife and I had a kid, and the baby was my mother-in-law's first grandchild (long story). My wife and I were relatively old for first time parents.
We were given $10,000 by the new grandparents, and $1,000 from my parents (who had already had this happen in their lives eight times). We also had our own savings, of course.
Although it was a difficult decision, we chose to buy eight semesters of 529 prepaid college tuition when our kid was just three months old. The total cost was $12,200.
The decision was hard because I was very conscious of coins, precious metals, monetary history and because I was mostly aware of how much purchasing power the U.S. dollar had already lost in the 1970s and 1980s.
In about ten weeks, that child will graduate from a four year public university with a bachelors degree in Nursing. Our actual college expenses have been low and easy to meet from our usual cash flow. No loans have been required.
It is certainly possible that the world as we know it won't hold together for twenty more years (and that was my very great concern in 1997), but if investing in such a 529 prepaid college tuition plan does happen to work out, the relief that you will have when it comes time to pay the future college expenses will be almost indescribable.
TLDR: Old Bill damn near broke his arm patting himself on the back.
20+ years ago a co-worker had a daughter who he named Morgan. He had not heard of the Morgan dollars, but after I mentioned then to him, he ended up getting one from 100 years before she was born and gave it to her as a present.
Along those lines, I would get a nice coin of the same denomination from 1819, 1919, and 2019. Then if you want to do something annually, just invest in an index fund. Then I think you get the cool grandpa and then have some spending money come college time.
Join the fight against Minnesota's unjust coin dealer tax law.
BTW - I don't give investment advice do don't construe my post to be investment advice in any way.
Join the fight against Minnesota's unjust coin dealer tax law.
Lots of great ideas up there. It matters what your goals are...
Interacting with old Gramps and having a keepsake? How about the treasure chest and start a 'one from every country' set...low cost and can spend time together looking at maps and talking about faraway places. Or a Dansco 7070 and start adding 1-2 coins a year...when she gets older you can pick some out together.
A coin stash she can liquidate at will? A couple 1/10 gold eagles every year. Get a tube and start filling it. Someday she may want/need the stash and can sell for whatever. It's more fun than a bank or brokerage statement.
A brokerage or bank account for all of the above reasons. Give her a sound head about investing.
A 529 account--lots of variables including she may not go to college. The nice secret here is that the account belongs to YOU. If she doesn't do college then you can re-designate the beneficiary. Or, liquidate (with whatever tax penalty) and give her money to open her small business or whatever. It's nice because it's yours and she can't run off to Vegas and blow it on supporting a boyfriend's gambling habit like a gift trust.
A Treasury Direct account with savings bonds in an option too.
I like the idea above of a joint investing account with you/spouse/her as joint owners. Just because she is a joint owner doesn't mean she has to know about it
.
Chocolate coins are always popular with children too.