Here's the scoop: My son is getting a $4K settlement for a dog bite that happened last year. My state says because it is under 5K, I am not required to put it in a trust fund. I was watching Today a few months back and they said if kids at the age of 15,16,17,18 put $2K a year away in a mutual fund (for those years ONLY), by the time either they retire or reach 30 (can't remember) they will have 1 million dollars. Now he's only 4, so by the time he retires 1 million isn't gonna be anything (hell it isn't now). I would like to make the most of this money (preferably tax free). I want him to be able to go through college and retire taken care of. WHAT DO I DO?? BTW the lawyer is willing to help, for a fee...lol. My father has made suggestions, but I wanted to get as many ideas as possible.
For someone so young with a 80+ years of life ahead of him, I'd suggest either a Standard & Poor or, a DowJones INdex Fund. Many companies have these as no loads {no commissions} and the management fees to the fund as a whole are very small because, no trading decisions are necessary. Put the money inand reinvest the dividend and capital gains. One day, he will be set for life.
There are a couple of good options avail for your son. One option is ETF's which are equity traded funds like the QQQs(Nasdaq top 100) or SPY(S&P500). Another option, if your credit is strong, is to put the money into the DP on a rental property and let it increase in value. Not only will he have the appreciation increase, but as a percentage of the investment it will increase faster than just about any other truly safe investment program. For example: $4000+ your contribution of about $16000 gives you $20000 as a DP on a $100000 purchase. If the property appreciates at 5% the first year, the property is now worth $105000 and his $4000 investment is now worth 25% more or $5250 plus whatever is paid down on the mortgage. BTW your part of the investment also has gone up 25% as well to $19750. Just something to think about fla-tan
KHM, I've accounts for each of my kids through Stein Roe's Young Investor's Fund: http://www.steinroe.com/steinroe/sr/scripts/home.jsp It's do-able with monthly payments even via automatic deductions if you want to contribute more. Sassy
I would suggest an educational Roth. I believe you can put 2k a year into it and all interest and appreciation is tax free.
