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What Would Be The Best Way To Invest Money For My 7 Year Old Son? |
My seven year old son has a savings account with about $300.00 in it. I want to start investing money for him so when he is an adult he will have a nice savings that he can build on. I would like to give him an opportunity to have money to buy a home, for education, for retirement, to reinvest, etc. I'm not quite sure about the stockmarket because it's not doing very well right now. What about mutual funds or an IRA account? You can't open an IRA for him unless he has earned income (you can hire him as an employee to meet the requirements for base income required as long as you document the compensation): www.sharebuilder.com For an IRA, he has to have earned income. Let your son think about his future home, retirement, etc. Invest in a College Savings Fund (529 Plans). These plans are specifically for investing saving that will used for college. So your 7 year old son has 11 years until he goes to college. Invest in a 529 College Saving Plan, and the money will be working all 11 years until your son needs them for college. This is what I HIGHLY recommend you do. Help your son get a degree, then he can worry about his home, retirement on his own. Make sure you teach him financial literacy early!! Now is a great time to be investing in stock mutual funds. If you want to use your investment for college you can invest it in your states 529 plan and the investment will grow tax free. Your son is 7 which means you probably will have more than 10 years to allow your invest to grow. Stock mutual funds are a perfect vehicle for that time frame. You could also open a non college account also using stock mutual funds and save for other goals (house, car, etc). In order to invest in an IRA you son needs to have earned income. I hope he is not working at age 7! Most investment companies will allow you to open an account with as little as $250 and add to it $50 monthly. Please email me at richardjackel2000@yahoo.com if you would like more specific and detailed mutual fund and 529 plan recommendations. Please be sure to include your state of residence in you email. 529 plans are state specific. |
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