Sounds like one of those low expense Vanguard index funds is the place for your son right now.

I say this because it is very easy to add small amounts to such a fund.

I keep hearing this kind of advice, but is there a direct link you could point us to?

I have a toddler and another one on the way.  I'd love to be able to teach them as young as possible about the compounding effects of investing.  

If you want to start saving for college for the kid, you can look into a 529 plan.





http://www.savingforcollege.com/intro_to_529s/what-is-a-529-plan.php

 

The most important thing is to make sure your retirement is funded.  I know I don't want my kids to have to look after me when I'm an old man.  A normal brokerage account is not a bad idea for him.  I would suggest getting him an account at Vanguard and buying Vanguard's total stock market ETF.

Welcome to the Old Dad Club.

My first (I'm also 45) was just born this week.  Nov 5.

My birthday as well.

IMHO, it's easier to be an old dad than a young one.  You're settled, jaded, pragmatic.  Makes things easier to manage.

Ibuprofen, invest in it.  

TRG

I'm trying to get a bet.ter handle on my own health to make sure I'm around for them as long as I can be.  Also figure I'll work well past normal retirement which is fine - I have a good job for that.

Great start, a few things.

Your son, or anyone for that matter cannot contribute any more than they earned in taxable income in a year up to whatever the limit is, now $5.5k if you're under 50. IE, if "he" wants to contribute $5.5kthen he would need to earn at least that much. Essentially I am telling you that your son cannot have any contributions until he can earn an income. As you own your own business, you have some creative options available to you. IE, once he is legally able to work and have a reportable income, you could pay your son $5.5k for an hour of work as a 1099 contractor if you so desire, which you could then write off of your taxes as a business expense. Your son, could then in turn contribute the $5.5k to his IRA. Your son is responsible for paying the taxes on this income, however if this were his only income he effectively wouldn't have any, while you would writeoff the $5.5k as a business expense reducing your taxes payable by ($5.5k * your effective tax rate)

Booyah.

Now. as far as my opinion... As others have said, you need to take care of your own retirement needs first. Think of it like an air emergency... You need to secure your own mask first before helping others... remember, due to health concerns, technology, etc you might not be able to work forever even though you'd like to.

Now, if you have taken care of yourself you next priority IMHO should be saving for his education, which you should use a 529 account for. (Tax advantaged education saving, similar to an IRA)

After that, then consider setting aside and investing some "slush" fund money for him.

My opinion is that is the order of precedent you should take.

After that, we could get into the specifics of investing - to keep a long and complicated discussion short, most people with a long time horizon (10+ years) would be best suited buying the vanguard S&P 500 index fund. Buy the same dollar allotment every year up or down, unless the market is tanking in which case buy double or triple the standard annual dollar allotment. Dollar cost averaging is your friend. Inspite of what any asshole tells you, it is the best simple investment you can make. In fact, the majority of paid money managers fall far short of the annual returns you will make with this strategy.

I wouldnt invest anything. You need to worry about getting your life straight first.

My inlaws had the opinion that they should help put my wife and her 2 deadbeat brothers through school. Just like you plan to, my father in law worked until the day he died. Well pretty close, he got diagnosed with stage 4 cancer and stopped working 2 months before he died. His life insurance paid for the 2 months of cancer related treatment that insurance didnt cover at the end left them with nothing.

The deadbeat brothers bailed when the gravy train stopped. They still owed some on my wifes education but it had my wifes name on it also so i paid that off and now provide free room and board for my mother in law.

I never understood this funding of college education nonsense. I could see cosigning a loan and advising them to save while they grow up but doing it all for them only teaches them that they can be worthless and you will foot the bill.

I completely misunderstood the question then. My apologies.

Alfac life insurance policy. I got 450 grand for me and 100 grand for the wife for 15ish a week.

This taking care of the kid thing will go away (not go away but will change direction). Its a natural feeling. The baby will be fine. Try to teach them to be better than you (nothing wrong with you, everyone wants their kid to be better) and the rest will fall into place. Focus on your goals whether that is paying of house, retirement, expanding business or whatever.

Being self employed you have a lot to teach a child.

I didnt have a great relationship with my parents until i was an adult but the best thing the did was teach me how to spend money wisely, run a business and be a good person.

Much better to just teach them how to invest when they get old enough to understand. My parents started me in mutual funds when i was 10 or 11. Not making me, just guiding me along with my bday money. I did it on my own and made the decisions with their guidance.

Just read about these in a book on bonds.






















 

Adequate life insurance
Minimize your debt
Living Trust
Low cost index funds.
:)

exercise program so you are around for the wedding.

Lots of good advice already. Make sure you're set for your own retirement first. Have enough life insurance to cover your expenses if you should die and consider the possibility of setting up a trust in your child's name to handle disbursements from any extra life insurance money. You child needs to have earned income in order to contribute to an IRA so that is out for now. The low cost index funds are a very good if you're looking to invest in something with growth potential. I would just put it in a taxable account in your name for now.

If you put it in a savings account in his name, when he is older if he wants to go to college and is applying for student aid, any funds in savings in his name will count towards his assets and he could be denied aid/scholarships.

There is also always a 529 plan that is tax deferred. I would be careful about contributing to this plan until you get a better handle on your child's academic desires. Any money into a 529 plan needs to be used for educational expenses. Your child may simply not want to go to college, or he may want to be like dad and start his own business. It would be nice to have the flexibility to give him the option to use that money as seed money for a business and not have to pay additional taxes and penalties.

What until he is about 6 years old.  Put him on the company payroll at 8-10 bucks per hour for 10 hours per week.  He can be the janitor.

Then start him a roth ira.  You will be custodian until he turns 18 then it is his.

By the time he gets to be 60 years old, he will be a millionaire.

Don't know if you have accounts at a credit union or not?  Our credit union puts our dividend returns into a savings account that I also direct deposit money into every 2 weeks from my paycheck.  The dividends don't pay a whole lot, but it's better than nothing.  This is for our first and we will then split dividend accruals between future children.

All the other advice seems great as well.  Something else to consider I guess

You can give a one time gift.  It was 50k, but might be more now.  You can also take out term insurance policy and put him down as Beneficiary.  Don't forget, you can set up a trust fund for him.

FWIW, every state's 529 is different. I found a lot of people here highly recommended against the 529 because it didn't offer that great of advantage. But when I looked into it more, I found that in Indiana you get a 20% tax-credit on your state income taxes up to a $5,000 investment. IE, I invest $5,000 in a 529 and the state gives me $1000 of that back. So really I've invested $4,000 and my fund starts off at a $5,000 balance; I've made 25% gains right off the bat. If that money isn't used for education you pay what? A 10% penalty? I'll happily pay the penalty down the road, I got paid 25% just to invest the money...

Just my take on the 529 and the "perceived" disadvantages; in at least some cases the advantages outweigh the disadvantages...