Setting up a custodial brokerage account ???

[IansMom]

Instead of giving my DC "consumable items" (his words lol) for their birthdays and holidays, my brother would like to deposit money in an account for them to use when they become an adult or go to college. I also plan to contribute. We are not talking large amounts of cash. My brother suggested Robinhood as that is what he uses. However, I really just want to drop the money in and not worry about manipulating it around, but I would like it to earn more money than a traditional savings account. Any BTDT or suggestions? Thank you.

ETA: DC are (almost) 13 and 6 if that helps.

[MSWR0319]

Instead of giving my DC "consumable items" (his words lol) for their birthdays and holidays, my brother would like to deposit money in an account for them to use when they become an adult or go to college. I also plan to contribute. We are not talking large amounts of cash. My brother suggested Robinhood as that is what he uses. However, I really just want to drop the money in and not worry about manipulating it around, but I would like it to earn more money than a traditional savings account. Any BTDT or suggestions? Thank you.

ETA: DC are (almost) 13 and 6 if that helps.

We just set up our 13 year old with his own Fidelity account (controlled by us but he can check his balance, though you wouldn't have to give them that information if you don't want). You can use it for a regular savings account, get a debit card, use it for investments, etc. There are parental controls on it. We haven't looked into a lot yet since out main goal was to get him a debit card, but plan to. Maybe that has something that you could use for this purpose. It wouldn't really help your 6 year old though, as they have to be 13.

[niccig]

Keep in mind anything in their name counts when looking at financial aid for college. DS wanted to do the same thing about that age. He put some money in and we matched it and he bought 3 shares in Tesla that are now 12 shares due to a stock split. Technically, they’re in DH’s name, but we know it’s DS. He tracks the stock, our financial advisor gives him updates. We decided on this rather than a mutual fund as it’s something DS can track and become involved. Though risk is there that he’ll end up with $0


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[MSWR0319]

Keep in mind anything in their name counts when looking at financial aid for college. DS wanted to do the same thing about that age. He put some money in and we matched it and he bought 3 shares in Tesla that are now 12 shares due to a stock split. Technically, they’re in DH’s name, but we know it’s DS. He tracks the stock, our financial advisor gives him updates. We decided on this rather than a mutual fund as it’s something DS can track and become involved. Though risk is there that he’ll end up with $0


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Thanks for sharing! He's our first and the financial aid didn't even cross my mind. I don't see him qualifying for financial aid based on need, but it's definitely good to keep in mind. Does the stock being in your DH's name not affect financial aid?

[niccig]

I think a higher percentage of child’s assets are counted for FAFSA. We’re not expecting DS to qualify either for financial aid. Here is some more information on savings accounts and FAFSA https://www.sapling.com/8059106/savi...t-affect-fafsa


Another idea we have is for DS to set up Roth IRA once he gets a part-time job. We’ve told him we’ll match what he puts in. I grew up in Australia and they have mandatory retirement accounts, even for part-time jobs. I contributed since I was 16 through college and then a couple years of full-time work. It was initially a small amount, but now 30 years later, it’s much larger amount. Retirement accounts don’t count for FAFSA

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[ezcc]

My kids all have custodial accounts with Schwab. They also have 529s, if you don't have one already. We use our state plan for those.

[bcafe]

My 16 yr old has a minor Roth account through Fidelity. He puts money from his paycheck. Make sure you estimate their earnings correctly though!

[IansMom]

Thank you all. This is very helpful.

[belovedgandp]

529 or ESA (educational savings account) is what we set up for our kids for money gifts to be designated for somewhere specific. My parents ended up setting up 529 accounts with their own financial planner for all their grandkids. Their state offers a slight tax benefit for investing in the state plan, so they can claim that on their own taxes.

Once my kids started working and having earned income, we set up Roth IRAs for them.

[LBW]

My youngest is somewhat interested in investing, so I set up a TD Ameritrade brokerage account for him. We add money to it when he gets cash gifts from family. (I use TDA for my IRAs, etc., and his account is connected to mine.) He has the TDA app on his phone, so he can check when he makes or loses money. When we set it up, he researched what to invest in. If you don’t want to spend a lot of time researching every time you add money, just pick something like an ETF that mimics the S&P, and purchase the same ETF every time the account has the funds. This all sounds complicated, but it’s not hard to do at all, and once the account is set up, the app is simple to use.