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I saw a post on Bogleheads regarding a question on grandchildren accounts.. I haven’t set up an account there to post so here is a method we used when children were very young.
We started and gifted to gift-to-minor accounts. Coordinate with the parents first so you don’t complicate financial aid packages for continued education. Once the children had taxable wages we gifted to Roth accounts in their names.
We stuck with a balanced 100% equity, domestic, foreign & dividend funds/etf’s. The returns averaged over 9% for 2 decades in the GTM & Roth accounts. The Roth earnings will continue to compound tax-free.
Nice work, Grandpa! That’s perfect.
Our kids were/are fortunate to have had their grandpa fund UTMA accounts. We put it in VTSAX, which has done great.
We are separately funding 529s. Those accounts combined will pay for college. If there’s any left over in the UTMA brokerage they’ll let it ride for future use.
Dr. Dahle (the White Coat Investor) calls it a “Twenties Fund,” because people in their 20s have a lot of good uses for money, but usually no money (travel, school, weddings, starting a household or family).
We have funded 529 plans from birth for each of our 11 grandchildren. This has been going on for 21 years and all accounts are invested the same and adjust to lower risk as they get close to using the funds.
What I find interesting is that because of market fluctuations, there is no logic to account balances. Some of the children several years younger than others have higher balances.
Now two are in college and another starts college in the fall. What we have been able to accumulate helps, but woefully inadequate for the task.
What I find depressing is that the total balance for all 11, is not sufficient to fund four years of college for one of them. 😢
Of course there is logic to the account balances. Sounds like the younger kids participated more in market run-ups than the older ones with less stocks.
Robert,
You are doing the right things.
We have decided we want to be able to see our children enjoy some of their “inheritance”. Rather than have to wait until we’ve died.
A very smart way to do this. Discussed many times on the BH forum.