Investment for kids future

Dec 8, 2019 24 Comments

My kid is almost 1 yr now. And we have come at a stage where we want to keep aside x amount every month for our kid’s future.

what are my options other than 529?
How about buying a ETF every month of x amount? but can anyone guide about which ETF is best for such 20+ years ?

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TOP 24 Comments
  • Citadel Securities Xnrs10
    Hire a financial advisor. Do not take financial advice from random anonymous programmers on blind.
    Dec 8, 2019 3
    • Honeywell tRud03
      Avoid fees at all cost. Buy total stock market index funds and never sell.
      Dec 8, 2019
    • Google MMTQ8
      If you get an advisor, get a fee-based advisor not one that charges 1-3%. Make sure they are fiduciaries.
      Dec 8, 2019
  • Samsung statarb
    It’s great that you are thinking about your kids future. There are two ways to go about it, both are not mutually exclusive. Fund kids education and/or fund kids retirement. Dropping 50K into a combo of s&p500 and nasdaq indices would yield a size able return for college in 17 years and retirement in 64 years. The way automation is progressing these days, there will be massive gains in productivity and unemployment at the same time.
    Dec 8, 2019 2
    • Salesforce bdij284
      OP
      Thanks!! I am mainly thinking about their education. Yeah I was thinking of putting some money in SPY and/or VUG. What do you think about these ETFs?
      Dec 8, 2019
    • Samsung statarb
      I would invest in the mini futures with assets purchased equivalent to cash value. You will lose a couple of percentage points when steps are taken by fund to track the index. Futures have the additional burden of having you roll over to the next quarters future on expiry. So, if you want to stay hands off, invest in index. SPY is good.
      Dec 8, 2019
  • Intel LvOT55
    We decided against a 529 because of how limiting it is. I'd say just invest the same money in a custodial account for them and it will automatically become theirs at 25 I think. But you can use it for their expenses until then.
    Dec 8, 2019 6
    • Intel gkkkfz
      Got it
      Dec 8, 2019
    • Intel LvOT55
      529 assumes you're only saving for education
      Dec 9, 2019
  • Riot Games reroll
    First - manage risk:

    - get term life on both of you, more on whoever is earning more. It’s cheap usually and ensures you’ll have support to be a single parent if something tragic happens. Also make sure you are opting into disability insurance at work if it is a choice. You’d usually want a 10 or 15 year policy on the term life in this situation.
    - save family assets and make sure your insurance would cover wipe out scenarios. Also usually cheap.
    - have a will. The most importance choice is the guardian of your kids and trustee of any trusts. Don’t get into the maze of setting out rules. There is no substitute for a trusted person with good judgement.

    In terms of specific investment on kids, 529s are great. They build tax free. And, if you are doing well when they go to college, you’ll pay out of pocket and the 529 is now a wealth transfer to them or it’s college coverage for their kids. The reason is that growing tax free is huge. If your kids make withdrawals 30-35 years from now for a house (or I guess grad school), it’s a bigger pool than if they spend it in 17, and withdrawing for a not-education expense is a limited penalty that is small compared to the growth.

    There are more advanced things you can do but those don’t make a lot of sense unless you are mega rich.
    Dec 8, 2019 2
    • Salesforce bdij284
      OP
      Great! Thanks reroll, what do you suggest on 529 money if our family moves out of US and my kid goes to university which 529 doesn’t support? Should I just take out money, pay fine and move out of US?
      Dec 9, 2019
    • Riot Games reroll
      I don’t know. You’ll need to research the rules on it. It would vary country to country as to how treatment is, if you can convert it out of the us and into a local equivalent, etc. Withdrawal with penalty is certainly an OK option if you can wait 20+ years however.

      If you intend on more kids, higher chance someone goes to school at a valid school or in the US.

      I’ve heard of people using 529s on some crazy stuff though, like educational vacations to the rainforest. You really have to research on how it would/would not qualify for international use, transferability, tax consequences.
      Dec 9, 2019
  • Thomson Reuters hswb27
    IUL life insurance. Most underrated investment vehicle. Not for everyone so recommend talking to a financial advisor that isn’t trying to sell you insurance.
    Dec 8, 2019 2
    • Google MMTQ8
      Do not listen to the advice above. ONLY get TERM life insurance for yourself and your family members. Term life is better than whole/universal because you decouple the investment from the life insurance coverage.
      Dec 8, 2019
    • Thomson Reuters hswb27
      I said it’s not for everyone. How can you discredit getting a life ins without knowing OPs situation or goals. High net worth individuals get life insurance all the time for various reasons.
      Dec 8, 2019
  • Amazon NBfu61
    Move to a country that offers free education right into university.
    Dec 8, 2019 1
    • Salesforce bdij284
      OP
      Sure! Thanks!
      Dec 8, 2019
  • Netflix the.oa
    These are the two vehicles to use. The 529 has the obvious tax advantage. That’s what I use.
    Dec 9, 2019 0
  • Epic / R&D
    CornOnTCob

    Epic R&D

    PRE
    Intel Corporation
    CornOnTCobmore
    Think of it the other way around. I am guessing your kid was born in US and now has dual citizenship. When they turn 18, they have to choose between US or Indian citizenship. What does your gut feeling say - which one would they choose? Just because you are moving out of US doesn't mean that your kid will choose India right..

    If they choose US, then wouldn't it be beneficial for them to have undergraduate education in US so that they get 4 years to adjust to the US culture before finishing their studies? If so, investing in 529 to pay for that undergraduate education makes sense right..
    Dec 9, 2019 0

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