[529](https://www.investopedia.com/terms/1/529plan.asp) or [UTMA](https://www.investopedia.com/terms/u/utma.asp).
Buy FXAIX or an equivalent
[Investing for kids](https://www.reddit.com/r/personalfinance/s/HyJ7eN7cyX)
And? Education is still one of the best investments one can make. If the idea is to set them up for life then a paid for education is one of the best routes to go.
100%. 10 years ago my index fund that mirrors the S&P had $32,000 in it. Today it is $112,000. It’s not a retirement account. It’s actually a fund I created 25 years ago for vehicles in retirement.
It literally hurts to imagine older people who literally hide away cash when they could have invested it. I guarantee someone out there buried the same amount you invested in their backyard 29 years ago.
This is the best answer, but OP please understand that returns are not guaranteed. Just because the S&P has averaged 10% per year over 100 years doesn't mean that it averages 10% per year every decade. There have been 10-year stretches where growth has been flat.
Meaning, it's likely the $10,000 could grow to $26,000 over 10 years, but there is a chance that it could still be worth $10,000 in 10 years, or even lose value. If you had started with $10,000 in the S&P 500 on 1/1/2000 and made no further contributions, on 12/31/2009 you would have $9088.32. Source [S&P 500 Total Returns by Year Since 1926 (slickcharts.com)](https://www.slickcharts.com/sp500/returns)
| “I have some experience in investing.”
Ok my man is probably talking about risk horizons. Not an easy answer. Hopefully they give more details.
| “cryptocurrency.”
Oh. He has Robinhood.
Friend, cryptocurrency belongs in the same investment pool as penny stocks or maybe blackjack. If you’re considering crypto alongside savings accounts then you should reframe the question: “if I gamble with this money, will I regret it?”
I could rant about cryptocurrencies giving liquidity to criminals and regimes with few options. Or about the scam exchanges that are in the news annually.
Or I could wax poetic about that sleepy bank down the street. Or that old timey treasurydirect.gov.
10 years is a lot of time in the market should you be considering stocks or index, but if the market dips the year he becomes vested in your gift, he may feel pressure to stay in the market, which might not be your goal.
I would consider the Folgers coffee tin (cafe bustelo at my house) before crypto.
>I could rant about cryptocurrencies giving liquidity to criminals and regimes with few options. Or about the scam exchanges that are in the news annually
Which is somehow unique to crypto? Lol.
If you're having a diverse portfolio of risk types , cryptocurrency can easily fit in.
But I agree on a 10 year , invest and forget it timeframe, crypto should be minimal with only BTC looked at.
Liquidity can be a problem with individual stocks, but usually only when the company is basically worthless already. I don't think I've ever heard of somebody having trouble getting out of an index position though.
The key difference is that publicly traded stocks are heavily regulated, in part to deter and punish material misrepresentations and omissions (fraud) by issuers, promoters, brokers, sellers, etc. Yes the Securities Acts apply to crypto, but punishment and enforcement has proven much more difficult than in traditional securities for all the obvious reasons. To pretend that the crypto market isn’t a breeding ground for scammers and manipulators is just being willfully obtuse. Two things can be true: (1) certain crypto investments *could* be part of a successful strategy [though probably not with $10,000] if the risk was appropriately balanced, and (2) the crypto market as a whole is a dangerous dumpster fire that an investment for your child shouldn’t be in.
Im in a similar situation, and do a passive invested index fund. It’s cheap, needs no attention from me and follows the average stock market (S&P 500), which most years increase 10-20%.
I have put money for my son (now 1) in VOO- up 33% so far. Broad based index fund- set it and forget it. He has enough time to ride out any poor performing years.
My plan is similar to gift it to him when he moves out (if I feel like he is responsible enough, otherwise he will get a portion).
Similar to mine. My oldest deposits are 9 years old and are up 300%. The most recent from last month are up 1-2%. The entire idea is to just sit tight and let time do its thing as the market goes up steadily over time.
Out of curiousity, is this something that's easy to put money into? We have a young child and a couple of familiar members are basically dumping extra money to be saved birthdays/christmas. Seperate from gift money. And as a not-investor type person, this sounds right up my alley.
And the intention is the same. It'll go towards college if there's a shortfall in scholarships, what she can provide, and what we can provide. If not, it'll keep building towards a starting out in life fund.
as someone said 529 for college fund. Investing is very easy these days in the US- open an account with a brokerage such as Schwab and just transfer over money from a bank- pick what you want to purchase and done.
Many banks have access as well (I bank with chase and it does). You might want to see what yours offers. They may even help you set it up.
It’s very easy here in Scandinavia, not sure about the US. It’s just a menu in our online bank, barely any harder than to just move money from one account to another. I’d check out with your bank if there’s an easy way.
I did the boglehead type portfolio for my son. 60% VTI, 20% BND, 20% VXUS and will just leave it alone for a long time, maybe check in once a year if I want to rebalance.
The rule of thumb is, if you need the money within 20 years you shouldn't be investing it all in stocks. Why not buy some bonds? 10 year treasuries are yielding 4.3%.
The idea is that when you buy bonds, you get to lock in your returns for a certain amount of time. The only variable becomes inflation, and there is an institution with a mandate to keep that low. That's where the low risk of bonds come into play. Stocks are volatile in short term, and HYSA is dependent on the yields today.
I completely agree. OP should invest it himself so he has the ability to help out the son when the son needs help for education, housing, wedding, or what have you. I would be concerned an 18 year old with $60K would go buy and crash a hellcat the day they get the money.
That sounds like very low risk. Cryptocurrencies and (Edit: Crypto-) ETF are right out.
I'd say All World ETF with a broker that supports Trailing stop loss on ETF. Then set the TSL to 5% and re-do the TSL order every \~3 months. This way you won't lose 40% if the market crashes in those 10 years.
Very low effort, very low risk, but pretty decent rewards.
Quite possibly one of the stupidest things I've ever read,congratulations.
Trailing stop losses are idiotic for a set and forget as you'll never be able to buy back in as you'll forget. Equating crypto, the greater fool token, with VTSAX comprised of actual companies that produce cash flows is laughable. And to call it " low effort and low risk" is the cherry on top. Great job on your part.
>Trailing stop losses are idiotic for a set and forget as you'll never be able to buy back in as you'll forget
That is not what will happen, though. Do you want to risk 40% or more of your capital in case of a serious market crash, even with Vanguard FTSE All-World? Or would you rather put a Trailing Stop Loss of 5% on them to minimize the risk even further? It's not like you won't get a Mail from your broker that your TSL was executed, which should already alert you that something happened in the market. You can then buy back in a week or a month later, when you're sure that the worst is over. And put new TSL's on them.
>Equating crypto, the greater fool token, with VTSAX comprised of actual companies that produce cash flows is laughable
That is not what I have written, though. I wrote that anything related to cryptocurrencies, including the iShares Bitcoin Trust are overly risky and not worth considering for a 10 year investment, especially if you want to "buy and forget".
Buying Vanguard All-World, putting a TSL with 5% on them and re-applying the TSL every three months sounds very low effort and low risk to me. Sure, you can just \*not\* use a TSL and just buy-and-forget for 10 years, but that sounds a bit risky? If you really can't be bothered, you could just put it in a fixed deposit with \~3.5% interest.
Do you own your own business. You can open a custodial Roth and contribute to that on behalf of your child if they have earned income. But I would speak to a tax advisor to get exact details.
Note that it has to be real earned income so you have to have some records that your kid did advertising or something possible as a newborn. Alternatively you can put it in a 529 which they'll be able to draw from to fund their own IRA when they start working and they can use the rest for schooling or other excepted reasons (or just take it out at a 10% penalty).
For stonks, s&p500. Best performance long term, volatile short term but there is 18+ years to grow.
Personally, giving an 18 year old a large sum of cash could be considered reckless. I’d invest the 10,000 and sit on it for as long as possible, 20/30 years or longer.
does he plan on spending it at 18? if it's for college or similar, an S&P500 index fund may be too aggressive for a 10 year timeline.
you could consider a target date fund for 2035. it'll automatically adjust its risk profile as you get closer to the target date. pretty much ideal for the "i want to invest this money until X date then start spending it"
if you can wait longer. 18 years old is a horrible age to give say 40k that will be in 10 years.
I put in our wills and trusts 23 y/o if we were to pass.. even that to me is to young. Boys brains don't fully mature easily until about 24 or 25..
You may find these links helpful:
- ["How to handle $"](/r/personalfinance/wiki/commontopics)
- [Investing](/r/personalfinance/wiki/investing)
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Like others have stated, a 529 would be a great option. In this regard, all the growth will be tax free if you spend on his education. In the event you do not use all the money for eligible expenses then one day it can be rolled over to his Roth IRA. If you find yourself helping him apply for financial aid, money in a 529 and UTMA will be considered.
One thing that is guaranteed is your need to retire. There is no guarantee he goes to college. May be in your family's best interest to simply keep the money in your name (if not doing 529) and give a gift like when he buys a house.
Alternatively, put the money in a Money Market Mutual Fund or High Yield Savings account and hang on to it until you know for sure that you don't need the money.
From a good perspective you need to make your investments diverse. I honestly recommend some of it in bonds, some of it in stocks & index funds, some of it in XRP ripple. Now the last one is most important of all, even if its ten dollars just buy a little xrp ripple on coinbase. Notice I did not mention any other crypto coins but only XRP ripple. Take it into prayer.
Not a pro / just a noob, but I was wondering about the same question:
I'd suggest you get a good dividend ETF with growth potential and reinvest the dividend regularly, while adding new stock monthly. (All growth investors, please forgive me)
I find that JEPQ/JEPI looks interesting.
You can see the dividend of each month grow in size for the next 10-15-20 years and then show your son how this investment (and compounding) works.
Ultimately your son will be able to retire early, if he adds fire to the flame and continues investing into his future. Might be a great motivation to keep working and have his retirement plan worked out for him.
At some point in time, he can decide whether he wants to have the freedom to work less to have time for family, quit his job to pursue a dream or retire early.
He can then choose whether he wants to grow his monthly dividend, by working and picking up the investment, or whether he wants to use the dividend as a monthly support from his dad during hard times.
In any case, he will never go hungry, and he'll have what we didn't.
I think it’s a great idea to put the money in an account that you supervise, but which he manages. You can exercise control in an age-appropriate way as he ages. It will be fun for him to pick stocks in Nike and Hershey and whatnot, and later it’s an excuse to talk about mutual fund and diversity.
He may not do as well as just putting the money on the S&P, as far as this particular 10k, but I bet he’ll do a lot better investing over the course of his life.
I’ve taken this approach with my kids and it’s great fun as they fight about who gets to check their account balance first (“it’s Sunday, nothing has changed,” “I just want to look!”), or who’s turn it is to buy some more stock. When we drive around we talk about what it means to “own” some part of a company.
A 529 fund through Fidelity or similar with a target date of 10 years from now. It's tax free growth that can be spent on any post-secondary school expense. If he doesn't use it for schooling up to $35k can be converted tax-free to a Roth IRA to set him up for retirement.
Don't you dare touch crypto, you'd be throwing the money in the toilet.
Noble to want to save for your child. Curious though, if you have experience investing why one earth would you ask about crypto? It is speculative and basically gambling. Put it in an index fund or a target date fund and let it grow.
>I would put it in a 529 Plan, but based on the list of different options you wrote, I'm guessing you won't.
So consider a high yield savings account or CDs. Safe, simple, no risk.
Whatever you do, don't put it in cryptocurrency - that's speculation, not investment.
Depending on your age the best bet would be to put it in a ROTH IRA over 2 years and leave it all in VOO.
When you turn 59 give it to your son… tax FREE
Is your son's future college? Then go with a tax advantaged account specific to education, like a 529 plan if you're in the U.S..
If it's something else, research and ask about that something else specifically. E.g. if you just want your son to have a house one day, build a plan for that specifically. So maybe you'd invest in securities, but you also at some point buy land and one day your son can build a house on it with the investment proceeds.
Bottom line, you are doing a great job already thinking about this. But research, ask, scrutinize, don't rush.
Coverdell account or 529 plan. Annual contribution limits for each, so watch what you put in there annually. Pick a couple of solid mutual funds with low fees.
Is it possible to set him up a Roth IRA at this age? Retirement is a big pressure for everyone. I would put 80% of it into S&P 500 like others have stated, but use the other 20% to analyze and pick stocks together. This could be a great learning opportunity for him in trading, without having to worry about capital gains tax. When he gets a job, you could show him how to start adding money to this account and the beauty of compounding interest. I am not co-signing everything about the man, but Dave Ramsey used to have some good tools/education material for kids and adults that explains the basics of investing.
Maybe invest in his education and health, for example. Cos you never know if anything is gonna be still there in 10 yrs besides knowledge, real skills and health. Just imo
This sounds like exactly the job target-date mutual funds were invented for. The whole point is to put in money and not think about it again until "retirement" or, in this case, "adulthood". The composition of a 2035 fund right now would be about 70% stock, 30% bonds, with more of that switching to bonds as 2035 approaches.
Investing in your son's future is more effective on a larger timeline; give the money to him only when he's old enough to understand what he has.
To illustrate:
Adjusted for inflation, over decades, you can expect to average say 6% return annually if you pop $10,000 in low-fee mutual fund like VTI, VOO etc. This is adjusted for inflation and is an estimate...also, 10 years is "short" and the market has been way too hot for way too long so I'm guessing this is not phoned in...anyways...
So in 2034 you can expect to have around $18K (in today's dollars) in the account.
Now let's say you don't tell him and let it ride until he is 28. He hopefully has a career, possibly a family, home, etc. Most importantly, he has no idea you have savings for him.
In 2044 you can expect to have around $33K in today's dollars.
Now here's a crazy thought...what if you let it ride, untouchable, for 50 years?
You will be long gone possibly (condolences), but your son will have $180+K, adjusted for inflation, in 2074. All from a modest $10K his parent had the kindness to set aside for him.
Potentially, this is the kind of thinking that can provide perpetual generational wealth for your descendents. Your great grandchildren may be free of "the rat race" to change the world. Start a non-profit, donate to charities, whatever they want!
But not everyone is psycho like me lol. Absolutely don't get me wrong -- $18K at 18 years old is nothing to scoff at. Let me explain the fear I am projecting here...
I had generational wealth set up for me. Lots and lots of stock. But my dad was eager to get all his kids out of his hair finally and handed me the reigns at 18. During the great recession, ignorant of its value, I sold for pennies on the dollar. All so I could be lazy and not work during Uni and drink and party.
If I hadn't...well, let's just say I have fucked my kids and their kids and pretty much everybody of a life outside the cycle of poverty (mom's side is broke).
Not saying your kid is me. Just saying why risk it? Is a 20% chance they blow it worth it? If you can wait until they are 35, I feel like the "blow it" odds drop to like 5%. Much more palatable.
All that aside, let's get to an actual, actionable plan.
You sound like you want a "set it and forget it" strategy. So, open an individual investment account at Fidelity or Vanguard or wherever and plop the money in a total-stock market index fund with the lowest fees possible. Cash out when wanted.
If you are comfortable extending that timeline to 15 years -- [open a 529](https://www.nerdwallet.com/article/investing/529-plans-by-state). The law has recently been changed to allow 529s to be converted to Roth IRAs if not used for qualifying educational expenses after 15 years. Best of both worlds -- use it for college OR let it ride, baby! All tax-advantaged to maximize what you keep from the IRS.
Now for crypto. Crypto is not a hands-off strategy; it's a whole thing. But, frankly, if you have an extra $250 or $500 to add to the $10K for a much higher risk-reward trade-off, buy Bitcoin ETF (easiest) or Bitcoin directly (harder if you are tech-illiterate but worth the effort). BTC is the best performing asset class of all-time. But crypto can become gambling **really** quickly so only put that in if you're ok with $500 becoming either $0 or $5,000 in 10 years lol. Not everyone has the luxury to risk $500.
I know this was a lot, so I don't blame you if you didn't get this far. I am super passionate about saving for kids' futures though so if you have any follow-up questions I would be happy to assist further.
8 half oz gold bars. Might not have quite the growth history as S&P fund, but would be a lot more fun to receive as a birthday present. Also has some other advantages.
Honestly, Bitcoin. There are plenty of great options in the market and plenty of high-risk/high-return altcoin options in crypto, but if you want something low-risk, high-return to just park $10k in for a decade, Bitcoin is a no brainer.
Edit: The fact that this got downvoted actually makes me so happy because it shows how little people actually pay attention to fundamentals or do research of any kind. Inverse Reddit is a highly profitable trading strategy, and I recommend it to anyone who would like to be ahead of the pack rather just another one in the herd.
[529](https://www.investopedia.com/terms/1/529plan.asp) or [UTMA](https://www.investopedia.com/terms/u/utma.asp). Buy FXAIX or an equivalent [Investing for kids](https://www.reddit.com/r/personalfinance/s/HyJ7eN7cyX)
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Also worst case you set up grandkids for education too.
And? Education is still one of the best investments one can make. If the idea is to set them up for life then a paid for education is one of the best routes to go.
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S&P 500 index fund
100%. 10 years ago my index fund that mirrors the S&P had $32,000 in it. Today it is $112,000. It’s not a retirement account. It’s actually a fund I created 25 years ago for vehicles in retirement.
29 years ago my S&P index fund had $10k. It is now worth $180k.
It’s the eighth wonder of the world.
It literally hurts to imagine older people who literally hide away cash when they could have invested it. I guarantee someone out there buried the same amount you invested in their backyard 29 years ago.
Yup, google Warren buffets million dollar bet to anyone against the s&p
What does s&p stand for?
This is the best answer, but OP please understand that returns are not guaranteed. Just because the S&P has averaged 10% per year over 100 years doesn't mean that it averages 10% per year every decade. There have been 10-year stretches where growth has been flat. Meaning, it's likely the $10,000 could grow to $26,000 over 10 years, but there is a chance that it could still be worth $10,000 in 10 years, or even lose value. If you had started with $10,000 in the S&P 500 on 1/1/2000 and made no further contributions, on 12/31/2009 you would have $9088.32. Source [S&P 500 Total Returns by Year Since 1926 (slickcharts.com)](https://www.slickcharts.com/sp500/returns)
| “I have some experience in investing.” Ok my man is probably talking about risk horizons. Not an easy answer. Hopefully they give more details. | “cryptocurrency.” Oh. He has Robinhood. Friend, cryptocurrency belongs in the same investment pool as penny stocks or maybe blackjack. If you’re considering crypto alongside savings accounts then you should reframe the question: “if I gamble with this money, will I regret it?” I could rant about cryptocurrencies giving liquidity to criminals and regimes with few options. Or about the scam exchanges that are in the news annually. Or I could wax poetic about that sleepy bank down the street. Or that old timey treasurydirect.gov. 10 years is a lot of time in the market should you be considering stocks or index, but if the market dips the year he becomes vested in your gift, he may feel pressure to stay in the market, which might not be your goal. I would consider the Folgers coffee tin (cafe bustelo at my house) before crypto.
>I could rant about cryptocurrencies giving liquidity to criminals and regimes with few options. Or about the scam exchanges that are in the news annually Which is somehow unique to crypto? Lol. If you're having a diverse portfolio of risk types , cryptocurrency can easily fit in. But I agree on a 10 year , invest and forget it timeframe, crypto should be minimal with only BTC looked at.
Exchange exit scams and liquidity issues are not typical with stocks or index funds, no.
Liquidity can be a problem with individual stocks, but usually only when the company is basically worthless already. I don't think I've ever heard of somebody having trouble getting out of an index position though.
The key difference is that publicly traded stocks are heavily regulated, in part to deter and punish material misrepresentations and omissions (fraud) by issuers, promoters, brokers, sellers, etc. Yes the Securities Acts apply to crypto, but punishment and enforcement has proven much more difficult than in traditional securities for all the obvious reasons. To pretend that the crypto market isn’t a breeding ground for scammers and manipulators is just being willfully obtuse. Two things can be true: (1) certain crypto investments *could* be part of a successful strategy [though probably not with $10,000] if the risk was appropriately balanced, and (2) the crypto market as a whole is a dangerous dumpster fire that an investment for your child shouldn’t be in.
I mean as long you label your diversification as “novelty/gambling” and put in with the expectation of losing it, then sure.
Yeah every major asset holder is offering Bitcoin, and other crypto securities but sure its "gambling".
Ok so just novelty then. But let’s tone it down a notch. After all, it’s all legitimized gambling anyway.
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Crypto is not investing. If you have a couple of million in safe investments and real estate, by all means, buy some crypto.
Exactly. Crypto is gambling. Only put money allocated to fun money in crypto.
Im in a similar situation, and do a passive invested index fund. It’s cheap, needs no attention from me and follows the average stock market (S&P 500), which most years increase 10-20%.
Yes, one option is to buy the Vanguard fund (VOO). Do you invest in it as well?
I have put money for my son (now 1) in VOO- up 33% so far. Broad based index fund- set it and forget it. He has enough time to ride out any poor performing years. My plan is similar to gift it to him when he moves out (if I feel like he is responsible enough, otherwise he will get a portion).
Similar to mine. My oldest deposits are 9 years old and are up 300%. The most recent from last month are up 1-2%. The entire idea is to just sit tight and let time do its thing as the market goes up steadily over time.
Out of curiousity, is this something that's easy to put money into? We have a young child and a couple of familiar members are basically dumping extra money to be saved birthdays/christmas. Seperate from gift money. And as a not-investor type person, this sounds right up my alley. And the intention is the same. It'll go towards college if there's a shortfall in scholarships, what she can provide, and what we can provide. If not, it'll keep building towards a starting out in life fund.
as someone said 529 for college fund. Investing is very easy these days in the US- open an account with a brokerage such as Schwab and just transfer over money from a bank- pick what you want to purchase and done. Many banks have access as well (I bank with chase and it does). You might want to see what yours offers. They may even help you set it up.
Thing is, I don't want it locked into a college fund, which is why 529 isn't terribly appealing to me.
I'm not in the US (living abroad) so I just toss it into a regular brokerage account since 529 is not the solution for us here as well.
It’s very easy here in Scandinavia, not sure about the US. It’s just a menu in our online bank, barely any harder than to just move money from one account to another. I’d check out with your bank if there’s an easy way.
529 in the US for education
I did the boglehead type portfolio for my son. 60% VTI, 20% BND, 20% VXUS and will just leave it alone for a long time, maybe check in once a year if I want to rebalance.
Why anything in bonds for a kid?
The rule of thumb is, if you need the money within 20 years you shouldn't be investing it all in stocks. Why not buy some bonds? 10 year treasuries are yielding 4.3%.
HYSA is at 5% and liquid
For now..
The idea is that when you buy bonds, you get to lock in your returns for a certain amount of time. The only variable becomes inflation, and there is an institution with a mandate to keep that low. That's where the low risk of bonds come into play. Stocks are volatile in short term, and HYSA is dependent on the yields today.
Don’t give your son 10,000$ for his 18th birthday. Invest it for him. Put it towards education. Your 30 yr old son will be much more grateful.
I completely agree. OP should invest it himself so he has the ability to help out the son when the son needs help for education, housing, wedding, or what have you. I would be concerned an 18 year old with $60K would go buy and crash a hellcat the day they get the money.
18 year old will piss that away so fast. Don't disappoint yourself, hold it for him and only put it for a qualified expense
What’s your acceptable risk level?
haha Imagine that putting that 10k in Nvida back in 2015? that 10k would be around 4 mill right now.
or, Imagine picking countless other stock and having it lose 80% of it's value.
Oh, in that case, I think my son would be incredibly happy) Smiled, thank you)
That’s why he asked you what your level of acceptable risk was.
I would like to buy now and not look at it for 10 years.
That sounds like very low risk. Cryptocurrencies and (Edit: Crypto-) ETF are right out. I'd say All World ETF with a broker that supports Trailing stop loss on ETF. Then set the TSL to 5% and re-do the TSL order every \~3 months. This way you won't lose 40% if the market crashes in those 10 years. Very low effort, very low risk, but pretty decent rewards.
Quite possibly one of the stupidest things I've ever read,congratulations. Trailing stop losses are idiotic for a set and forget as you'll never be able to buy back in as you'll forget. Equating crypto, the greater fool token, with VTSAX comprised of actual companies that produce cash flows is laughable. And to call it " low effort and low risk" is the cherry on top. Great job on your part.
>Trailing stop losses are idiotic for a set and forget as you'll never be able to buy back in as you'll forget That is not what will happen, though. Do you want to risk 40% or more of your capital in case of a serious market crash, even with Vanguard FTSE All-World? Or would you rather put a Trailing Stop Loss of 5% on them to minimize the risk even further? It's not like you won't get a Mail from your broker that your TSL was executed, which should already alert you that something happened in the market. You can then buy back in a week or a month later, when you're sure that the worst is over. And put new TSL's on them. >Equating crypto, the greater fool token, with VTSAX comprised of actual companies that produce cash flows is laughable That is not what I have written, though. I wrote that anything related to cryptocurrencies, including the iShares Bitcoin Trust are overly risky and not worth considering for a 10 year investment, especially if you want to "buy and forget". Buying Vanguard All-World, putting a TSL with 5% on them and re-applying the TSL every three months sounds very low effort and low risk to me. Sure, you can just \*not\* use a TSL and just buy-and-forget for 10 years, but that sounds a bit risky? If you really can't be bothered, you could just put it in a fixed deposit with \~3.5% interest.
That is exactly what you've written, though.
Do you own your own business. You can open a custodial Roth and contribute to that on behalf of your child if they have earned income. But I would speak to a tax advisor to get exact details.
Hmm, I need to look into this. Thank you.
Note that it has to be real earned income so you have to have some records that your kid did advertising or something possible as a newborn. Alternatively you can put it in a 529 which they'll be able to draw from to fund their own IRA when they start working and they can use the rest for schooling or other excepted reasons (or just take it out at a 10% penalty). For stonks, s&p500. Best performance long term, volatile short term but there is 18+ years to grow.
A 529 is a more flexible way to accomplish this.
529 or UTMA Put sp500 into one of the above, gift to man at 18 and be considered awesome.
Personally, giving an 18 year old a large sum of cash could be considered reckless. I’d invest the 10,000 and sit on it for as long as possible, 20/30 years or longer.
does he plan on spending it at 18? if it's for college or similar, an S&P500 index fund may be too aggressive for a 10 year timeline. you could consider a target date fund for 2035. it'll automatically adjust its risk profile as you get closer to the target date. pretty much ideal for the "i want to invest this money until X date then start spending it"
What are your expectations for what he does with this money at 18?
if you can wait longer. 18 years old is a horrible age to give say 40k that will be in 10 years. I put in our wills and trusts 23 y/o if we were to pass.. even that to me is to young. Boys brains don't fully mature easily until about 24 or 25..
CD until rate cut happens then long SPY
I’ve had access to 90 day 5.5% CDS. It’s been easy money. Flipped it over 4 times. Just keeps adding with no risk.
Yeah they're so good right now.
I’d probably split it 50-50 in (low expense ratio) aggressive growth and total market funds. Maybe QQQ and VTSAX
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Like others have stated, a 529 would be a great option. In this regard, all the growth will be tax free if you spend on his education. In the event you do not use all the money for eligible expenses then one day it can be rolled over to his Roth IRA. If you find yourself helping him apply for financial aid, money in a 529 and UTMA will be considered. One thing that is guaranteed is your need to retire. There is no guarantee he goes to college. May be in your family's best interest to simply keep the money in your name (if not doing 529) and give a gift like when he buys a house. Alternatively, put the money in a Money Market Mutual Fund or High Yield Savings account and hang on to it until you know for sure that you don't need the money.
S&P 500 index fund. Cryptocurrency would just be gambling with the money and isn't the same as investing.
Don’t touch crypto with a 10 foot pole in this instance. It’s too volatile. Would you take this money to the casino?
From a good perspective you need to make your investments diverse. I honestly recommend some of it in bonds, some of it in stocks & index funds, some of it in XRP ripple. Now the last one is most important of all, even if its ten dollars just buy a little xrp ripple on coinbase. Notice I did not mention any other crypto coins but only XRP ripple. Take it into prayer.
Not a pro / just a noob, but I was wondering about the same question: I'd suggest you get a good dividend ETF with growth potential and reinvest the dividend regularly, while adding new stock monthly. (All growth investors, please forgive me) I find that JEPQ/JEPI looks interesting. You can see the dividend of each month grow in size for the next 10-15-20 years and then show your son how this investment (and compounding) works. Ultimately your son will be able to retire early, if he adds fire to the flame and continues investing into his future. Might be a great motivation to keep working and have his retirement plan worked out for him. At some point in time, he can decide whether he wants to have the freedom to work less to have time for family, quit his job to pursue a dream or retire early. He can then choose whether he wants to grow his monthly dividend, by working and picking up the investment, or whether he wants to use the dividend as a monthly support from his dad during hard times. In any case, he will never go hungry, and he'll have what we didn't.
I think it’s a great idea to put the money in an account that you supervise, but which he manages. You can exercise control in an age-appropriate way as he ages. It will be fun for him to pick stocks in Nike and Hershey and whatnot, and later it’s an excuse to talk about mutual fund and diversity. He may not do as well as just putting the money on the S&P, as far as this particular 10k, but I bet he’ll do a lot better investing over the course of his life. I’ve taken this approach with my kids and it’s great fun as they fight about who gets to check their account balance first (“it’s Sunday, nothing has changed,” “I just want to look!”), or who’s turn it is to buy some more stock. When we drive around we talk about what it means to “own” some part of a company.
BTW, I’ve been using Stockpile for this. I have some complaints, but overall it serves its purpose well.
A 529 fund through Fidelity or similar with a target date of 10 years from now. It's tax free growth that can be spent on any post-secondary school expense. If he doesn't use it for schooling up to $35k can be converted tax-free to a Roth IRA to set him up for retirement. Don't you dare touch crypto, you'd be throwing the money in the toilet.
Please for the sake of the son, forget about crypto. It’s not even an investment. Don’t gamble on that.
Stocks are a great choice, consider a low-cost index fund like VTSAX.
Noble to want to save for your child. Curious though, if you have experience investing why one earth would you ask about crypto? It is speculative and basically gambling. Put it in an index fund or a target date fund and let it grow.
The best investment imo is an index fund that follows the s&p500. I personally have almost all of my money currently in VOO.
Invest it and don't touch it until he retires.
>I would put it in a 529 Plan, but based on the list of different options you wrote, I'm guessing you won't. So consider a high yield savings account or CDs. Safe, simple, no risk. Whatever you do, don't put it in cryptocurrency - that's speculation, not investment.
Depending on your age the best bet would be to put it in a ROTH IRA over 2 years and leave it all in VOO. When you turn 59 give it to your son… tax FREE
Is your son's future college? Then go with a tax advantaged account specific to education, like a 529 plan if you're in the U.S.. If it's something else, research and ask about that something else specifically. E.g. if you just want your son to have a house one day, build a plan for that specifically. So maybe you'd invest in securities, but you also at some point buy land and one day your son can build a house on it with the investment proceeds. Bottom line, you are doing a great job already thinking about this. But research, ask, scrutinize, don't rush.
Coverdell account or 529 plan. Annual contribution limits for each, so watch what you put in there annually. Pick a couple of solid mutual funds with low fees.
Is it possible to set him up a Roth IRA at this age? Retirement is a big pressure for everyone. I would put 80% of it into S&P 500 like others have stated, but use the other 20% to analyze and pick stocks together. This could be a great learning opportunity for him in trading, without having to worry about capital gains tax. When he gets a job, you could show him how to start adding money to this account and the beauty of compounding interest. I am not co-signing everything about the man, but Dave Ramsey used to have some good tools/education material for kids and adults that explains the basics of investing.
Maybe invest in his education and health, for example. Cos you never know if anything is gonna be still there in 10 yrs besides knowledge, real skills and health. Just imo
I'd go with stocks for growth potential over 10 years, but do your research to pick stable options.
This sounds like exactly the job target-date mutual funds were invented for. The whole point is to put in money and not think about it again until "retirement" or, in this case, "adulthood". The composition of a 2035 fund right now would be about 70% stock, 30% bonds, with more of that switching to bonds as 2035 approaches.
QQQM is my pick. (I've invested money for my kids here.)
Currencies, including crypto, are not investments.
Investing in your son's future is more effective on a larger timeline; give the money to him only when he's old enough to understand what he has. To illustrate: Adjusted for inflation, over decades, you can expect to average say 6% return annually if you pop $10,000 in low-fee mutual fund like VTI, VOO etc. This is adjusted for inflation and is an estimate...also, 10 years is "short" and the market has been way too hot for way too long so I'm guessing this is not phoned in...anyways... So in 2034 you can expect to have around $18K (in today's dollars) in the account. Now let's say you don't tell him and let it ride until he is 28. He hopefully has a career, possibly a family, home, etc. Most importantly, he has no idea you have savings for him. In 2044 you can expect to have around $33K in today's dollars. Now here's a crazy thought...what if you let it ride, untouchable, for 50 years? You will be long gone possibly (condolences), but your son will have $180+K, adjusted for inflation, in 2074. All from a modest $10K his parent had the kindness to set aside for him. Potentially, this is the kind of thinking that can provide perpetual generational wealth for your descendents. Your great grandchildren may be free of "the rat race" to change the world. Start a non-profit, donate to charities, whatever they want! But not everyone is psycho like me lol. Absolutely don't get me wrong -- $18K at 18 years old is nothing to scoff at. Let me explain the fear I am projecting here... I had generational wealth set up for me. Lots and lots of stock. But my dad was eager to get all his kids out of his hair finally and handed me the reigns at 18. During the great recession, ignorant of its value, I sold for pennies on the dollar. All so I could be lazy and not work during Uni and drink and party. If I hadn't...well, let's just say I have fucked my kids and their kids and pretty much everybody of a life outside the cycle of poverty (mom's side is broke). Not saying your kid is me. Just saying why risk it? Is a 20% chance they blow it worth it? If you can wait until they are 35, I feel like the "blow it" odds drop to like 5%. Much more palatable. All that aside, let's get to an actual, actionable plan. You sound like you want a "set it and forget it" strategy. So, open an individual investment account at Fidelity or Vanguard or wherever and plop the money in a total-stock market index fund with the lowest fees possible. Cash out when wanted. If you are comfortable extending that timeline to 15 years -- [open a 529](https://www.nerdwallet.com/article/investing/529-plans-by-state). The law has recently been changed to allow 529s to be converted to Roth IRAs if not used for qualifying educational expenses after 15 years. Best of both worlds -- use it for college OR let it ride, baby! All tax-advantaged to maximize what you keep from the IRS. Now for crypto. Crypto is not a hands-off strategy; it's a whole thing. But, frankly, if you have an extra $250 or $500 to add to the $10K for a much higher risk-reward trade-off, buy Bitcoin ETF (easiest) or Bitcoin directly (harder if you are tech-illiterate but worth the effort). BTC is the best performing asset class of all-time. But crypto can become gambling **really** quickly so only put that in if you're ok with $500 becoming either $0 or $5,000 in 10 years lol. Not everyone has the luxury to risk $500. I know this was a lot, so I don't blame you if you didn't get this far. I am super passionate about saving for kids' futures though so if you have any follow-up questions I would be happy to assist further.
8 half oz gold bars. Might not have quite the growth history as S&P fund, but would be a lot more fun to receive as a birthday present. Also has some other advantages.
Honestly, Bitcoin. There are plenty of great options in the market and plenty of high-risk/high-return altcoin options in crypto, but if you want something low-risk, high-return to just park $10k in for a decade, Bitcoin is a no brainer. Edit: The fact that this got downvoted actually makes me so happy because it shows how little people actually pay attention to fundamentals or do research of any kind. Inverse Reddit is a highly profitable trading strategy, and I recommend it to anyone who would like to be ahead of the pack rather just another one in the herd.
My company posted a 57B profit last quarter. We don't have budget for anything. Headcount, software, nothing. It's on purpose.