I agree a Roth is probably best from all I’ve read. I opened a Coverdell account for my kid as soon as we got his SSN from the state. He’s got a decent savings account now at age 6, and I would like to check on further investments for him. However, I don’t think a minor can possess a Roth. I gotta dig deeper.
You’re a good parent. Your child will appreciate it!
‘14 Key West 203FS w/ Yamaha F150
"Kiss my ass, I bought a boat; I’m goin’ out to sea." (Jimmy Buffett covering Lovett)
Dear Double…A Roth IRA is a good choice of accounts. Bear in mind that the account is merely a basket designed to hold investments, and not an investment itself. The Roth IRA(Individual Retirement Account)allows for investment growth without taxation based on short or long term capital gains, or interest and dividend income that accrues from investments. This enhances the compounding of growth. Money invested within a Roth IRA must be held in the account for a minimum of 5 years AND until age 59 1/2 to avoid income taxes on the accrued gains. Money contributed to Roth IRA can be withdrawn at any time without income taxation, but growth will be taxed if it fails to meet both holding requirements as stated above. Your son should take a few elective courses in finance to gain the basic understanding of asset classes, capital markets, and modern portfolio theory and risk management. Time is on his side. You have great parental instincts.
Dear Double…Why would you choose a single company as an investment? The Southern Company, SCE&G, Con Edison, etc., etc. are great Utilities, and as such are required to pay dividends to shareholders, but a single stock is the antithesis of diversification and thereby risk management. Please consider a diversified, no load, low expense ratio, stock index mutual fund. Vanguard has a S&P 500 Index fund that will expose his investment to the 500 largest and most long term successful corporations in the USA. Southern Co. is one of those 500 corporations, and if it’s performance sucks because of poor management, interest rate volatility, or policy meddling by a hostile administration, his investment isn’t devastated. Read up on John Bogle the founder of Vanguard before you spend the money. It can’t hurt.
Thanks Bossdog, not going with Regions due to the annual fees. Also, not going with straight SO either. Have been on the phone with Fidelity, Ameritrade and Vanguard.
I hooked my kids up with Vanguard mutual funds a few years ago. Now that they’ve had part time jobs we’ve helped them start Roth IRA’s with Vanguard as well. In order to contribute to a Roth, they have to have earned income.
Thanks Bossdog, not going with Regions due to the annual fees. Also, not going with straight SO either. Have been on the phone with Fidelity, Ameritrade and Vanguard.