"Beginner" Investment Account

[esiekman]

Good Afternoon! I am looking for, if it exists, an investment account that would allow my son, now 18, to put money in to...when he can. Sometimes he may have $20, sometimes $50, sometimes $100. There is nothing consistent about his income, result being inconsistent deposits. Also, it would be nice if there was not a minimum initial investment. As a college student he does not have much money. Thank you.

[chief04010]

I make it rule not to give advise since I am not qualified to do so. But that being said if I were talking to my son when he was 18 years old knowing then what I know now, I would tell him to do his own research, learn as much as he could and point him in the direction of a Roth IRA, Personally I would choose Vanguard, but others will say different and they may be right.

[ArrieS]

I would vote for Wisebanyan. It's entirely free and you can put as little in as you want. But I would suggest regular investing. As you said he doesn't have much and it is inconsistent. So just setup a little that you know he will have, even if it's $50 dollars a month.

Studies have shown people do better with "set it and forget it" investing than random deposits regardless of the amount. They are also more likely to continue saving and raise the amount latter as they earn more since it requires the lest amount of effort.

[crondanet5]

How anbout you become his banker? He gives you the money, you match it, and you open a savings account in a bank. Then when he needs cash it is readily available, your match encourages his thriftiness, but like all savings there comes a time to use it. Sound like a plan?

[crondanet5]

May I suggest a different approach? I place great emphasis on academic accomplishment. That accomplishment may lead to awards, job offers, and future academic programs. There is no way to know how important your son's baccalaureate grades and acquired knowledge will be. But let's assume it is important. Why not give him a cash allowance so he can use his time to make the best grades possible? The key is the amount of time available to study. The jobs he finds cannot pay that much money, but the grades he makes can. I suggest you support his getting top grades over starting an investment program at this time in his life.

[rcozby]

Last year, after graduating from college, my son did his own research (mostly via Mr. Money Mustache) and put his life savings ($5000) into the Vanguard Total Stock Market Index Fund ETF Shares (VTI). It's a Morningstar 4-star fund and has one of the lowest expense ratios out there (0.05%). In the time that he has been in it has gone basically nowhere, but the fact that he has it has dramatically increased his interest in the markets and in investing in general. It's super easy to set up and use and he's able to "IFT" from the VTI to a money market at no cost - and more than 2 times a month! I believe the learning opportunity is well worth the boring results.

[Aitrus]

May I suggest a different approach? I place great emphasis on academic accomplishment. That accomplishment may lead to awards, job offers, and future academic programs. There is no way to know how important your son's baccalaureate grades and acquired knowledge will be. But let's assume it is important. Why not give him a cash allowance so he can use his time to make the best grades possible? The key is the amount of time available to study. The jobs he finds cannot pay that much money, but the grades he makes can. I suggest you support his getting top grades over starting an investment program at this time in his life.

We're kind of planning to do the same thing. We're teaching our kids to save and that they have to work to earn their allowance money. They also know that when they go to college, if they go to a cheap, but reputable, local college then they can live at home and have a loaner vehicle to drive. They'll need to work a little to pay for their own insurance and chip in on groceries. If they maintain an A average, then mom and dad will help out with tuition. If, however, they choose to believe that college is an experience and not about getting an education, then they're on their own.

As for the OP, what we're doing is serving as the investment vehicle for them. At 9 and 13, they give us their money. We have set up bank accounts in their name, and the money goes in. We treat it like an investment vehicle, not a bank account, and the account earns 5% on the first $500, normal rates for any amount above that. Whenever they put in birthday or chore money, we match 100%. We're teaching them about investing through board games with home rules built in.

The plan is that when they come of age and begin working and can invest in their own account, then whatever is in the bank will get pulled out and used as the first lump sum investment. But before they are allowed to pull out the money from that account, they'll have to give us a presentation of which investment firm they're going with, the comparison companies they looked at, the pros and cons of each company, and why they chose the company they went with.

[ArrieS]

When I have children I plan on opening a ROTH account and fund it for them immediately. I know the rules don't say you can't do it. But it's all dependent on if they have income. If i get into an argument with the IRS I'll simply say i was paying them a wage and it was below the threshold for reporting.

worse case i have to dissolve it and pay taxes on the gains.
best case I added at least 16 years of tax free compounded returns for their retirement.

It's easier to ask for forgiveness than it is for permission.

[Scorpio70]

I like Vanguard

[skiehawk11]

ArrieS, a decent website for info on Roth for kids...whenever that may be.

http://irakids.com/index.php?section=ho ... come_types

[weir003]

Try Betterment.com

[skiehawk11]

Try the following (I recommend WiseBanyan just because it's free and it does the same thing as Wealthfront or Betterment):

https://wisebanyan.com/
https://www.wealthfront.com/our-low-fees
https://www.betterment.com/pricing/

[TSPBuilder]

I like ProFunds. It does require $2500 with a service advisor or $15000 for an individual. I get that it is a lot of money to start. I changed my lifestyle in my twenties and saved up the $1000 dollars over 1.5 years to invest in my first IRA at T. Rowe Price.

ProFunds costs zero dollars to use except the 15/yr custodian fee for the IRA (the one I transferred from T. Rowe Yes you will read that there is a hefty 1.78 to 2.5% fee every year but at the bottom of that same paragraph on fees is the caveat that ProFunds waives these fees every year and has been doing that for at least the past decade that I have been investing with them. I exchange between funds with no worries about costs and that is very freeing to invest better. No front or back loads and I'm told there are no fees for cashing out either (can't remember the term for that at this time). Another beauty of ProFunds is that they have inverse funds so you can make money even in the down times.

I wish you and your son a great journey. Live long and prosper