Hello My kid is 6 month old and we are proactively thinking of setting up a fund for him. Thinking of Shawab Premium Robo Advisor with 10% cash allocation (pro: CPA advising, con: fees) Another option is just allocating each month into VOO and VTI. I know that Vanguard give > 10% returns per last 10 hrs performance. Any advise from experts here. Thank you. #personalfinance #investments
Why not a 529 account? That's tax exempt as long as it's used for education. Rest of the fund you could set up however you'd like
Thank you. I did consider this as well. I need to look at the tax benefit and also study the asset allocation.
Cool. It's very good cause it's tax exempt and if I remember correctly each state has a different plan
Skip the robo. No point in paying the fees when you can automate easily with vanguard directly. If you get the mutual fund versions of VOO and VTI, vanguard supports automated monthly, weekly, or bi-weekly purchases. You can leave that on for the next 18+ years. Unfortunately vanguard doesn’t allow you to do automated purchases with their etfs, only their index funds. Since this is for your child, you shouldn’t be selling anyways so the tax differences between etf vs mutual fund are relatively moot.
Thank you. I was wondering whether diversification(commodities and fixed income bonds )/ cash allocation / changing allocation with time/ and CPF services make it a good/low risk option.
Take a moment to read through this bogleheads page about lazy portfolios. You can mimic what the robo advisors do with these. https://www.bogleheads.org/wiki/Lazy_portfolios If that’s too much work, you can also use vanguard target date funds, which automates the changing allocation for you over time. If you go this route, pick a fund with a target date far into the future so it starts off aggressive and gets more conservative as your child reaches 18. Hope that helps.