Posted: 7/24/2026 2:51:07 PM EDT
| My daughter wants to open some sort of an account for her 7yo daughter. Initial amount 2500.00. Any input on where to look and what type of account? High interest, investment, etc. I’m guessing she’d need to be the primary. Thanks |
| Joint mutual fund account. Make it a Roth IRA account. Dump it into an S&P500 index fund. Good choice would be Fidelity 500 Index Fund (FXAIX) |
Posterity! You will never know, how much it cost the present Generation, to preserve your Freedom! I hope you will make a good Use of it. If you do not, I shall repent in Heaven, that I ever took half the Pains to preserve it.---John Adams
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Originally Posted By enigma1: My daughter wants to open some sort of an account for her 7yo daughter. Initial amount 2500.00. Any input on where to look and what type of account? High interest, investment, etc. I’m guessing she’d need to be the primary. Thanks Look into your states 529 account (if they have them). Tax free (state) to dump money into the account......friends/family can also easily put money into the account (at least in MO). Here is the one in Michigan...... https://www.misaves.com/ |
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Fidelity has any account type you could want and fidelity is always the best answer. Custodial accounts, IRAs, brokerage accounts, youth accounts, cash accounts with debit cards, credit cards, etc. Best app/website and when you call an America answers and fixes whatever problem you have. I would avoid putting large amounts of money into a 529. |
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Be aware, if the child goes to college, financial aid assumes all non-retirement accounts in a child's name is considered 100% available for college expense. Invest accordingly. The downside of 529s is if the account value goes down, say it was invested in stocks, and funds are needed for tuition then the loss can't be written off. |
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Originally Posted By spmx7777: Be aware, if the child goes to college, financial aid assumes all non-retirement accounts in a child's name is considered 100% available for college expense. Invest accordingly. ETA To finish that thought ... Any money put aside in a child's account will be subtracted from any financial aid received, effectively making "saving for college" pointless. |
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Originally Posted By spmx7777: ETA To finish that thought ... Any money put aside in a child's account will be subtracted from any financial aid received, effectively making "saving for college" pointless. I'd rather save than be stuck with student debt... with an interest rate. |
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Originally Posted By spmx7777: ETA To finish that thought ... Any money put aside in a child's account will be subtracted from any financial aid received, effectively making "saving for college" pointless. Unless you’re legit poor all the fretting over who has what assets is wasted breath because you have to have no significant net worth and very low income to get free money. Fafsa is a fraud and the main purpose is to asses how much money your student will be loaned with and without the parents co-signing. If you’re bored look into what financial data fafsa requires from the parents. Previous tax returns, bank/investment account balances, equity in your house, etc. |
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Originally Posted By enigma1: My daughter wants to open some sort of an account for her 7yo daughter. Initial amount 2500.00. Any input on where to look and what type of account? High interest, investment, etc. I’m guessing she’d need to be the primary. Thanks Originally Posted By enigma1: To get her a head start on saving for the future/college/retirement/home etc. Happy my daughter is thinking about her child's future and is moving fwd w/ it. @enigma1 Roth IRA is likely the wrong answer here. Daughter is 7 and Roth requires earned income. Just opening a simple Brokerage account at Fidelity (or similar) is very simple, but it needs to be a custodial account since the beneficiary is a minor. I'd personally recommend opening a Trump Account. Here is why: 1. No earned income requirement. Any combination of people can contribute to it, up to $5000 per year. 2. Auto-invests in a very low fee S&P500 index fund. Total hands free investing. 3. Cannot be touched/withdrawn until kid turns 18. 4. Auto-converts to a type of Traditional IRA at age 18. 5. Can be converted to a Roth IRA once it becomes a Traditional IRA at age 18, and can then grow tax-free for life. 6. Withdrawals (taxable) can be made for education and/or first time home purchase once it auto-converts to IRA at age 18. 7. No strings attached for education like a 529. 8. Stupid easy to open, and fund. Simple clean app or website to track it. |
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Originally Posted By FedDC: Vanguard makes it very easy to open a 529 for a child. From there, you can fund their education and then roll the remainder into a Roth IRA that will grow for a long time. It is a great deal. Some states also have special plans that offer tax benefits. You cannot roll the remainder into a Roth IRA in all cases. The child can only roll a maximum of $35k into Roth IRA from a 529 source, lifetime. The ability to roll the money into a Roth IRA can only be done if the account has met the 15 year timeline. The child can only roll over to a Roth IRA, up to their total earned income in a year, or the max of $7500 in a year, whichever is lower. 529's are a great deal *if* there is a state income tax deduction for contributions, and you ensure you do not overfund them to the point where they don't get used for education, and you don't have more than needed to max the $35k Roth rollover max. There are many strings attached to a 529 plan. IF you just KNOW that you will be able to use it for the intended purpose, they are great... especially with a contribution tax deduction. Personally, I chose a taxable brokerage account, a Roth IRA account, and Trump accounts for my children, to give them more options and less strings attached.... giving up a small amount of tax advantage given by the 529 plan (I don't live in a state with a tax deduction for contributions) |
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Originally Posted By FALARAK: Personally, I chose a taxable brokerage account, a Roth IRA account, and Trump accounts for my children, to give them more options and less strings attached.... giving up a small amount of tax advantage given by the 529 plan (I don't live in a state with a tax deduction for contributions) I know that a couple states require money stay in a 529 for some period of time before you can withdraw it, so check your state laws first. |