529
Do you want to teach your kids how to invest but you’re not quite sure how to get started? Whether you have children still crawling around on the living room floor or teenagers filling out college applications, we’ve assembled some great resources to help you and your kids learn about investing together.
Traditional Child Savings Account
Stocks, Bonds or Mutual Funds
529
Child Savings Account
Many banks and credit unions offer special kids' savings accounts that enable your young child or teen to “level up” from a piggy bank in their bedroom and begin learning how to save and use a bank account. To choose the best savings accounts for kids, pay attention to the interest rate, any fees or minimum balance requirements, the way you and your child can access the funds, and how the account can grow with them as they mature.
My Top Choice
BECU- The Early Saver Account
With 6.17 %apy from the 4th largest credit union in the United States, BECU offers the best rates with fair money management for both you and your child. To learn more or to sign up Click Here
Stocks, Bonds, Mutual Funds
As opposed to saving money, investing has the potential to make a much bigger profit. There are a few ways to invest for kids, but they all have one thing in common – the goal of kickstarting a young one’s future goals.
Participating in the stock market from a young age prepares kids for financial independence as adults. They also get to enjoy the benefits of building interest. You don’t need a lot of money to start investing. Many brokerages offer low or no fee trading and fractional share trading offers flexibility in choosing how to invest especially when you start with a smaller amount.
Picking kid stocks like Disney, Hasbro or McDonald’s will help kids relate to investing more. Kids will understand what it means to own a piece of a company they know and love. You can find apps on the Apple Store or Google Play that support fractional shares and youth accounts. Robinhood offers fractional shares and ETFs.
529
The Guaranteed Education Tuition (GET) program, is Washington's 529 prepaid college tuition plan. There are two types of 529 plans: Prepaid tuition plans, where you buy college credits for the future at today’s prices, and education savings accounts where you build a balance and invest your money in the market. Withdrawals are tax-free as long as they’re used for qualified education expenses. Depending on the state where you live, contributions may be tax deductible, or you may be eligible for a tax credit on your state income tax return.
Conclusion
Investing for kids is a great way to teach them the basics of investing, establish a solid nest egg and limit the need for education debt. However, make sure you carefully consider the different account options and their impact on your tax bill and your child’s future financial aid applications. But overall, starting early is an essential step in preparing your child for their future.
