Brokerage accounts for minors
We ask what if questions. What ifback in college, we had the guts to ask brokerage accounts for minors person out? What if we had accepted that great job offer, located in brokerage accounts for minors state?
What if questions rarely have answers—with one possible exception. What if you had started to invest from a younger age? But if you inspire your child, your paperboy or the girl who mows your lawn to start investing now, it could change brokerage accounts for minors lives.
Kids who start investing early can grow rich with ease. He mows lawns and walks dogs. I used to teach a high school personal finance class. When I showed kids how money compounds over time, many itched to start investing right away.
About a third of my students opened investment accounts. Depending on your state, that would occur between the ages of 18 and Aidan opened his custodial account with Schwab. The average investor in actively managed funds pays about 1. Aidan will outperform most of these investors because his fees are much lower. His index fund costs just 0. When investing, the less you pay in fees, the more you get to keep. Sixteen year old Chase Schachenman was one of my students who opened a custodial account with Vanguard.
You can see how he did it by following the online screencast that he created for my class. About 10 percent of the fund is made up of bond indexes. The remainder is invested in stock indexes. Chase pays a paltry 0. The fund gets automatically rebalanced each year. But they have to be earning an income during the year they make the contribution. Our instincts tell us that we can help our kids by giving them money towards a home downpayment, a car, or an investment portfolio.
Free money often gets wasted. Most fifteen year olds would demonstrate even less restraint than most adults. To learn the value of money, kids need to earn it. Albert Einstein once said that compound interest is more powerful than the splitting of the atom. Andrew Hallam is a Digital Nomad. From Millionaire Teacher to Millionaire Expat.
This article contains the opinions of the author but not necessarily the opinions of AssetBuilder Inc. The opinion of the author is subject to change without notice. All materials presented are compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. This article is distributed for educational puposes, brokerage accounts for minors it is not to be construed as an offer, solicitation, recommendation, or endorsement of any particular security, product, or brokerage accounts for minors.
Performance data shown represents past performance. Past performance is no guarantee of future results and current performance may be higher or lower than brokerage accounts for minors performance shown. Consider the investment objectives, risks, and expenses carefully before investing. Back to the knowledge center.