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Bad324

How would you invest your kids gift money?

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We had my girls baptized over the weekend and the ensuing party got them gift money. I want to invest/save this money for them and my guess it's somewhere between $3-500 for each kid. My mom already started a 529 for each one of them as a gift, my aunt is starting a "special" account whatever that may be so thought I would do something other than a typical savings account. 

But I have little to zero knowledge of what else to do or look in to so thought I'd get some ideas from the collective brain trust who've done this before 

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So many variables... if your mom plans to continue contributing to the 529, then that's good, but there's nothing stopping you from opening up another 529 in each of their names that you and the Mrs. contribute to.  Your 529 contributions are good up to $2000/year off your Ohio state taxes.

It all depends on how fiscally diligent you are to keep contributing to it, or just adding to it "as you can/want" -- that'll steer your path into different options.

 

Or, you could always spend it on hookers and blow for you, because you can't make your children happy unless you're happy too.  Something about Maslow's Heirarchy of Needs and sh*t.

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15 hours ago, Disclaimer said:

So many variables... if your mom plans to continue contributing to the 529, then that's good, but there's nothing stopping you from opening up another 529 in each of their names that you and the Mrs. contribute to.  Your 529 contributions are good up to $2000/year off your Ohio state taxes.

It all depends on how fiscally diligent you are to keep contributing to it, or just adding to it "as you can/want" -- that'll steer your path into different options.

 

Or, you could always spend it on hookers and blow for you, because you can't make your children happy unless you're happy too.  Something about Maslow's Heirarchy of Needs and sh*t.

So the 529 my mom started will be getting contributions every year. Right now I'm not sure how regular we can be with contributions until all the fun of the twin and nicu medical billls along with my wifes damn school loans get paid off. I wanted to do something other than a 529 plan simply so the money can make more on itself and they can use it in high school for a car or whatever other needs they might have when I cut them off :lol:

Edited by Bad324

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open up a cheap per trade account and buy a few shares of one of vanguard's etf's.  if it has dividends, set it so it continues to re-invest into the fund it came from.  better than nothing?

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15 hours ago, Disclaimer said:

you could always spend it on hookers and blow for you, because you can't make your children happy unless you're happy too.

I was about to type that exact statement word for word.

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Consult a financial planner for this and for yourself while you're at it. A good one will not charge you for the first consult. Odds are good you aren't adequately prepared (most people aren't) for retirement goals, estate plans, etc. Seems like small amount of money but that's how net worth is accumulated. At little at a time.

Slightly off topic BUT...

For everyone - especially married and/or with kids, you damn well better at least see an attorney to AT LEAST get your wills and powers of attorney (financial and medical) done. Don't wait. Yes it will cost you money (less so if you get your ducks in a row beforehand) but it will cost you and/or or your family more if this isn't done. And I'm not just talking about money. People with no wills or estate planning can go through incredibly painful and expensive months  if not years of getting things settled after the fact. Don't let third parties and  government decide what to do with your money, estate, and children!

It took years but I finally got my mom and dad to set up their wills and POA's. I literally had to have the atty come to their house. Not 3 weeks after this was done, my dad went into the hospital and was in bad shape, not able to make medical decisions for himself. If it wasn't for the POA, my mother never would've been legally able to dictate and give consent for his treatment, etc. It would've been left to the discretion of the doctors and hospitals. I'm happy to say he's better now but she was so happy we got that done. Made a huge difference.

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2 hours ago, Bad324 said:

So the 529 my mom started will be getting contributions every year. Right now I'm not sure how regular we can be with contributions until all the fun of the twin and nicu medical billls along with my wifes damn school loans get paid off. I wanted to do something other than a 529 plan simply so the money can make more on itself and they can use it in high school for a car or whatever other needs they might have when I cut them off :lol:

I think you're going to struggle to find any worthwhile investments for that sum of money unless you're going to do individual stocks, or an ETF like @jbot mentioned.

Most decent mutual funds start at an initial $2500 investment, with better ones starting at $10,000, then $50,000, then $100,000+

It also depends on your risk tolerance, diversification strategy, timeline to withdrawl, etc.  At $500 per kid -- you might just be better off in a CD.

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14 minutes ago, Disclaimer said:

I think you're going to struggle to find any worthwhile investments for that sum of money unless you're going to do individual stocks, or an ETF like @jbot mentioned.

Most decent mutual funds start at an initial $2500 investment, with better ones starting at $10,000, then $50,000, then $100,000+

It also depends on your risk tolerance, diversification strategy, timeline to withdrawl, etc.  At $500 per kid -- you might just be better off in a CD.

Thanks for the info everyone this is pretty much exactly what I was trying to figure out if there were any ventures for the small sum other than savings/cd. Ill have to look in to the options and see what will work

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I haven't looked into 529s in a few years, but when I did they didn't seem to have much of an advantage over just putting the money in a retirement account.

I even seem to remember some disadvantages if you ever try to get financial aid for college.

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^^^this is why you get with a professional. They know all the ins and outs and what's best for your situation/future plans.

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Just now, ScubaCinci said:

^^^this is why you get with a professional. They know all the ins and outs and what's best for your situation/future plans.

With as little money as I have available do you think it's worth seeking a pro? Also, how does one go about finding one that can be trusted?

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Yes...as I mentioned your initial consultation should be free. Advisors aren't just for the wealthy...how do you think people accumulate wealth outside of inheritance, etc? Likely they had someone helping them plan for it. It's not always about what you have, it's about what you want and how you plan to get there. How many people without an advisor have a solid, realistic and detail plan for retirement, college savings, etc? Most wing it, throw $ in a 401k and expect that when they get to certain age (they usually don't have a #) they'll magically be able to retire and keep the same lifestyle they are accustomed to.

Ask around with people in your area - friends, neighbors, even your doctor...see who they use and what they think. There are many articles on the web about this and what to look for. Most critical, make sure they are at least a Certified Financial Planner (CFP) - anyone can call themselves an advidor and have absolutely no training/credentials/education. There are a lot of CPA's that will also do "advising" but have no credentials to do so. Should be against the law but it's not. Then take that info and do a little research. You meet with one, don't like the vibe, check out another. Or you could do like me and marry one.

Before I met my wife, I had no goals or plans for retirement etc. I didn't even think about it. I have a son from a previous marriage. I had no college savings, no will, no estate planning - nothing. I probably still wouldn't have that stuff if not for her. In hindsight, I was an idiot and naive for not planning for my golden years (assuming I get there). Yeah, it costs money to have an advisor but in the grand scheme of things, it's not much and it depends on how complicated your finances and planning needs are. Well worth it. I can't tell you how many clients of my wife I've met, some of whom didn't become clients of hers until late in life, and they'd tell me- Joe, if it wasn't for her we'd never have been able to retire, afford x, etc.She literally changed our lives. This is why I'm passionate about recommending this...I see first-hand the impact it has.

All that said, you can't pick up an advisor and expect to just all of sudden have money to retire, etc. You have to actually follow their advice, maybe sacrifice buying that hot new Ducati, etc to get there but at least you'll have a solid plan and know what you can and can't do to meet your goals.

Edited by ScubaCinci

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51 minutes ago, Bad324 said:

With as little money as I have available do you think it's worth seeking a pro? Also, how does one go about finding one that can be trusted?

No, and good luck.  Half of them don't even have a fiduciary responsibility to you, in fact they just passed a law about that (http://www.usatoday.com/story/money/columnist/powell/2016/04/06/investors-new-fiduciary-rule-protection/82661384/).  Welcome to America.

Given that money is a pretty big deal, you should probably endeavor to learn about it yourself and not trust someone else to look out for you.

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Are there advisors out there that will try to take advantage? Sure. Are there doctors, lawyers, repairmen, salesman, etc (ad nauseam) that would also try to take advantage? Of course. Guaranteed the # of advisors that are crooked these days are far less in % than lawyers, doctors, etc. but when they are it's bad and it always makes news which skews the perception. The financial industry is more heavily regulated than medicine, law, etc.That new law you refer to is just the tip of the iceberg and if you learn about it, it actually pushes more people to advisors. In the financial world, you are guilty until proven innocent. All advisors shouldn't be lumped into a category of not having your best interests at heart no more than you can label all cops as racists. Though that's the perception people have from the news and Hollywood because all you ever see and hear is what's sensational and that's generally something bad. Of course, you should have a clue about finances and the advisor should explain everything to you so you understand. Just like anything else, you pay attention, do your homework, and if something does sound or feel right, you ask more questions or even a second opinion.

Also, advisors are not wall street brokers, they are financial planners. They don't take your money and invest for you as they see fit and leave you in the dark telling you don't worry, I have this covered. Many times, they simply educate you based on detailed analysis on what you need to do and you go do it. Here's how to allocate your 401k or you need to save x amount to have x amount for retirement, etc. So it's not like you hand them your money and they go sticking it in stocks and hoping for the best. They also advise you on estate planning - what happens to your assets and children when you die? What if you become disabled, or unable to make decisions because you are in a coma? Do you have the right documentation in place to cover those things? Do you know all of the scenarios to plan for? There's more than your money at stake.

I work for a large financial firm, I have nothing to do with money in the least and you wouldn't believe the amount of required "training" I have to take annually. In addition to codes of ethics, a million disclosures about my finances, political activity, outside activities (i.e second job), etc, etc. It's ridiculous.

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2 hours ago, ScubaCinci said:

^^^this is why you get with a professional. They know all the ins and outs and what's best for your situation/future plans.

Since I fired my professional and learned how to invest, my results are much, much, much better.

I also couldn't justify the fees I was paying.   

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Meh.  To each their own.

I'd much rather screw myself over so I know who to blame, than figure out 20 years later that someone else took me to the cleaners for something relatively simple to learn.

Are the people "advising" you that much smarter than you?  Did they spend years at an Ivy league school?  What's their personal financial situation?  Do they have good credit?  How much money do they make?  What makes them "qualified" to advise you?  What value do they bring if they're just going to plug your numbers into a templated spreadsheet, ask about your 'risk tolerance', and put together a [not really] 'custom' plan their 'firm' hands out to all 'clients'?

Save for some super crazy tax loopholes that most of the common folk can't really take advantange of anyway, I have confidence you can learn this stuff, because you're good enough, you're smart enough, and doggone it, [some, one?] people like you.

Edited by Disclaimer
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12 minutes ago, Disclaimer said:

Meh.  To each their own.

I'd much rather screw myself over so I know who to blame, than figure out 20 years later that someone else took me to the cleaners for something relatively simple to learn.

Are the people "advising" you that much smarter than you?  Did they spend years at an Ivy league school?  What's their personal financial situation?  Do they have good credit?  How much money do they make?  What makes them "qualified" to advise you?  What value do they bring if they're just going to plug your numbers into a templated spreadsheet, ask about your 'risk tolerance', and put together a [not really] 'custom' plan their 'firm' hands out to all 'clients'?

Save for some super crazy tax loopholes that most of the common folk can't really take advantange of anyway, I have confidence you can learn this stuff, because you're good enough, you're smart enough, and doggone it, [some, one?] people like you.

Yep.

It's a skill, like any other.  If you take the time to understand, you can learn.  You can find similar templates on the web.

If you aren't financially savvy you should already know it.  In that case, talk to multiple professionals and find one you are comfortable with.

 

Edited by Tpoppa

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Professional advisers that are free to you are paid by the "products" they have to offer and are very biased towards their own earnings.  I have had a few bad experiences with the recommendations these advisors make that benefit them more than me.

You pay fee for service advisors  and therefore they are less biased about the investment options they recommend.  But they are very expensive related to my assets and certainly the funds your kids received.

I recommend investing those funds on your own.  The 529 plans are educational for kids in that they list the investment option you have chosen, the unit price, number of units held, etc so you can track the growth of their investments.  The 529 does have tax advantages not available through other investments and the funds can be used in a variety of ways.

I agree the other investment option is a CD but rates for those are low right now too.

A savings account is also a good educational tool for kids when they get a bit older.

Good for you for being so thoughtful about those funds.

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You guys are too focused on the money aspect but I won't continue to beat the drum. Keep Google handy and your fingers crossed. 

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8 hours ago, Tpoppa said:

Since I fired my professional and learned how to invest, my results are much, much, much better.

I also couldn't justify the fees I was paying.   

Everyone does well in a bull market...

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