Saul,
Awesome, as usual. Thanks.
KLVanLiew
DJ,
Thanks for your time and input. 20 years from now, if your nephew sticks with it and doesn’t look until then… after he recovers from the shock, he will be giving you a call (or maybe paying the fee to teleport over to your place) to express his gratitude. I am trying to educate my 5 kids to become savers and good investors, as simple and passive or involved and active as they choose, as well.
Pretty good uncle indeed. Well done.
My best to you and your nephew,
KLVanLiew
Blowfish,
Right on. KISS: “Keep it simple, stupid”, as my dad used to tell me.
Here’s hoping that it will be the home of his dreams (AND, that he can make an all cash offer for it!),
KLVanLiew
We use sharebuilder to invest money for our three boys. I like how it’s automatic and they can purchase partial shares. They have income from a youtube channel that they created, so I talked to them about investing the majority of it. I told them I would match whatever they put in, so they didn’t really see a downside :). They still keep a portion of what they make if they want to buy something.
Maureen
I have been thinking about doing the same thing with my two sons who are 9 & 6. Everybody has brought up great points on how to get your kids involved and teaching them the basics of investing. One area that I am fuzzy about is how a brokerage account for your kids can have a impact getting finical aid or scholarship for college.
I thought I have heard/read articles in the past about assets that your kids may have in their name will influence what type of loans/scholarship a student can/cannot get. Can anybody speak to this topic.
Thanks
Andrew
I did a Coverdell for both of my kids. I like them because you can use the money for any educational expense. I also want to open a roth for each. I believe you can use those for education and also for the down payment on a first house, though I have not really done much research. I know that as long as you do returns for them, you can pay them and put the money into their account. It is such a small amount they will not have to pay taxes on it or anything.
let me know if you find out anything different.
Tdonb
I know there are rules/guidelines about that, and that “it depends” on how things are set up.
My solution to what was to set up (sub) accounts for both banking and investing for the kids (but only informally).
- The upside is no financial aid concerns.
- The downside is tax concerns on any capital gains.
-FrickNFool
1 Like
FrickNFool -
What do you mean by(sub)account?
Andrew
Andrew,
I mean simply that I’ve created an attached/related/sub/linked account for both banking and investing, that while “I own” (govt perspective), the money is meant for the kids.
It’s suboptimal from a taxes (gains) perspective, but there is of course no restriction on how/when/why the money is withdrawn.
-FrickNFool
From the stand point of many college scholarships, every dime the kid owns, even if in a trust, may count against them.
So with grandchildren they could lose a government dollar for every dollar they have on their own, especially if the parents don’t have many assets.
Teaching grandchildren in these circumstances good work and study habits, prudence in spending and the avoidance of student debt may be more useful that trying to teach them investing.
Go for Growth
- find 2, 3, or 4 high growth companies (like many we discuss on this board) and see if they fly or die? (I did put one of my boys into TSLA very early and he has seen $300 become $1500! Isn’t that cool!?! If only…)
Hi KLVanLiew,
I have been thinking about the same sort of question. I’ve got kids ages 5 and 20 months.
It’s still a little ways out before I’ll be able to get them interested in investing but I can’t wait to pick things until then so…
I do agree with making it fun, picking things they can relate to and so on… but I think for the money I invest now, I am going with small cap companies with high growth potential – I am swinging for the fences with these picks and if i strike out on a few it can still work out really well.
here’s an example why…
Stock Amount Invested Return Market Value Return Market Value
_____________________________________________________________________________
A 1000 5000% 51000 250% 3500
B 1000 -100% 0 250% 3500
C 1000 -100% 0 250% 3500
D 1000 -100% 0 250% 3500
E 1000 -100% 0 250% 3500
F 1000 -100% 0 250% 3500
G 1000 -100% 0 250% 3500
H 1000 -100% 0 250% 3500
I 1000 -100% 0 250% 3500
J 1000 -100% 0 250% 3500
_____________________________________________________________________________
$ 51,000 $ 35,000
This illustrates how connecting on one huge homerun can enable you to outperform very good returns on every pick in your portfolio.
In the first scenario, out of 10 companies I had one 50 bagger and 9 that went completely to zero.
In the second scenario, I had multi-baggers with all 10 of my picks… getting 15% annual returns on all of them over 10 years.
But it is option 1 that is worth more money. Of course, this is an extreme example but just to illustrate how one home run can make up for a lot of mistakes.
So given their time horizon, I’m picking a few smaller cap companies today that I believe can grow to be many times the size they are today. I don’t mean shot in the dark companies but mostly MF Recs that are on the smaller side and that I believe can grow for years and years.
as they get older, and they become more a part of it, i will probably steer things more towards companies they can relate to which may or may not be different from what I will have done to that point. but i am thinking more along the lines of DIS, SBUX, etc at that point.
best of luck,
michael
1 Like
Thanks Michael,
I appreciate the reply and perspective. Time is the friend of investors, especially when they are 5 and 20 mos. I hope you and yours stay the course, remain healthy, and become wealthy.
Keep swinging!
Here’s to more than one huge home-run out of those 10,
KLVanLiew