mamasita99
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Post by mamasita99 on Jul 6, 2020 7:53:25 GMT -5
My oldest daughter is turning 21 in a couple weeks, unbelievable. I don’t have a ton to give, but I want to gift her some money that can grow. She remembers her personal finance class in high school and the lessons on compound interest so I think she would appreciate the thought.
What is the best way to do this?
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justme
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Post by justme on Jul 6, 2020 7:59:43 GMT -5
Does she have any earned income this year? I'd open a Roth with Vanguard, Fidelity, maybe Schwabb and put the money in there if so. Start retirement savings with the hopes she follows, it being in a Roth won't complicate her taxes (like it would if it was a taxable account), depending on her income she might get money back with the savers credit, since it's a retirement account odds are she'd be less likely to cash it out when she wants/needs money.
Pretty much all the big ones have done away with minimums for both accounts and buying stock/ETF - though I think a few funds might still have minimums.
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giramomma
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Post by giramomma on Jul 6, 2020 8:36:00 GMT -5
We started a Roth for my 16 year old. I don't think he needs anymore money in his 529, so I talked it over with the grands and said we'll do Roth deposits.
Otherwise, you know your kid best. Cut her a check and see what she does with it. Not every young kid will blow through a taxable account. DH (and I through marriage) has had full access to his taxable for over 25 years. (Me, less, of course). We've touched it once, in that time. Cashed out 10% to put towards are house. We may have to touch it once or twice more before we're in our 70s.
But, I know we aren't the norm that's brought up in these sorts of situations.
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mamasita99
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Post by mamasita99 on Jul 6, 2020 9:05:12 GMT -5
I will head to the Vanguard site and see their minimums to start a Roth IRA for her. She currently has a 401k through her work even though she is part time, so at least she has something. If the minimums are too high I can open a taxable account for her. I don't think she would blow through a taxable account, I just really want her to see the benefits of compound interest. Plus she has been saving money in a regular high interest savings account so I want her to have somewhere to put that money as it grows.
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Rukh O'Rorke
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Post by Rukh O'Rorke on Jul 6, 2020 9:17:36 GMT -5
I will head to the Vanguard site and see their minimums to start a Roth IRA for her. She currently has a 401k through her work even though she is part time, so at least she has something. If the minimums are too high I can open a taxable account for her. I don't think she would blow through a taxable account, I just really want her to see the benefits of compound interest. Plus she has been saving money in a regular high interest savings account so I want her to have somewhere to put that money as it grows. I think it's a 1k. I gifted both DD and DS 1k to start a roth after their first year of earning money. it's not like a whole lot, but.... According to my Phil Script, a lump sum investment of $1,000.00 bearing an annual return of 11% could grow to $22,892.30 in 30 years! And it's a start! More of inspiration and to let them see the magic of compounding at an early age - with money that is in a protected retirement account.
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justme
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Post by justme on Jul 6, 2020 9:17:58 GMT -5
If Vanguard has mins (I don't think they do) then open it at Fidelity. That's where my Roth is and I just opened it with no minimum right when the stock market crashed back in March. Fidelity is just as good as Vanguard, though the main reason why I chose it is that my 401k is with them and the ESPP whenever I remember to join it.
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MN-Investor
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Post by MN-Investor on Jul 6, 2020 9:25:54 GMT -5
I have two dear nieces who are recent college graduates. To encourage them to invest, I've offered to fund Roth IRAs at Fidelity for them. The deadline for 2019 contributions is July 15, 2020. What I'm going to do is contribute the first $6,000 for each. Then I'll contribute up to $4,000 more by matching what they put in their own 401(k)s or IRAs. An important part of this gift is also giving each of them a copy of Investing Made Simple by Mike Piper. It's a super simple book to read with great information and advice. I've given copies of it away to other relatives who are starting to invest.
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Lizard Queen
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Post by Lizard Queen on Jul 6, 2020 10:43:04 GMT -5
I have both fidelity and vanguard. My dad started my Fidelity account for me to transfer some money into a Roth. He gifted my brother and sister, to help them out, and wanted to even things up.
I really like the fidelity website, though a little less now that they changed it slightly. I locked myself out of vanguard, so not sure about that one.
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Rukh O'Rorke
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Post by Rukh O'Rorke on Jul 6, 2020 11:24:33 GMT -5
I have two dear nieces who are recent college graduates. To encourage them to invest, I've offered to fund Roth IRAs at Fidelity for them. The deadline for 2019 contributions is July 15, 2020. What I'm going to do is contribute the first $6,000 for each. Then I'll contribute up to $4,000 more by matching what they put in their own 401(k)s or IRAs. An important part of this gift is also giving each of them a copy of Investing Made Simple by Mike Piper. It's a super simple book to read with great information and advice. I've given copies of it away to other relatives who are starting to invest.
Now that is a very generous gift!!
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busymom
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Post by busymom on Jul 6, 2020 11:28:25 GMT -5
We started an IRA for DD as a graduation gift. I've told her a bunch of times that "life happens while you're busy doing other things", and that the years will fly by, so it's best to start saving for retirement early. She did take the hint, and is also putting money away with her employer.
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souldoubt
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Post by souldoubt on Jul 6, 2020 12:03:49 GMT -5
I started my Roth at the age of 18 in 2000 by going to a local WAMU (now Chase) and sitting down with a rep there. Since then it's gotten a lot easier as you can open an account online, link it to your bank account while better and cheaper investment options are available to average investors. If you really want to help her work with her to have her set up her own account whether it's through Vanguard, Fidelity, etc. and you can give her $1,000 or whatever that she can contribute to it. It's good that she remembers the lesson on compounding but she's 21 and the best way for her to learn going forward is for her to set it up and manage it.
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tallguy
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Post by tallguy on Jul 6, 2020 12:49:36 GMT -5
I also opened a Roth for my son when he started working. His first job came late in the year, so I was limited to the $3000 that he earned. The second year I matched what he put in, so about $2750 of the $5500 limit. I think it is a great way to get them started with an investing habit.
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mamasita99
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Post by mamasita99 on Jul 6, 2020 13:21:46 GMT -5
I should also introduce her to the Phil Script!
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MN-Investor
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Post by MN-Investor on Jul 6, 2020 13:28:29 GMT -5
I have two dear nieces who are recent college graduates. To encourage them to invest, I've offered to fund Roth IRAs at Fidelity for them. The deadline for 2019 contributions is July 15, 2020. What I'm going to do is contribute the first $6,000 for each. Then I'll contribute up to $4,000 more by matching what they put in their own 401(k)s or IRAs. An important part of this gift is also giving each of them a copy of Investing Made Simple by Mike Piper. It's a super simple book to read with great information and advice. I've given copies of it away to other relatives who are starting to invest.
Now that is a very generous gift!! My sweetie passed away two years ago, very unexpectedly, at the age of 63. One of his greatest gifts to me was the love of investing. I was always thrifty, but I was hesitant about investing. But DH got us started in the late '70s by investing in his employer's Employee Stock Purchase Plan. I did the same when that became available. Over the years we invested well and that has left me in a great position to help the next generation of relatives. I want to get them into the habit of investing too!
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bookkeeper
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Post by bookkeeper on Jul 7, 2020 8:22:26 GMT -5
When we gift to our two children we try to either pay down student loan balances (at 6.8%) or make a Roth IRA contribution to their account.
I feel both of these avenues have the most bang for the buck. Our sons have both matured about money, so the hookers and blow aspect of gifting to them is less of a thing.
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tskeeter
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Post by tskeeter on Jul 11, 2020 18:43:00 GMT -5
I have both fidelity and vanguard. My dad started my Fidelity account for me to transfer some money into a Roth. He gifted my brother and sister, to help them out, and wanted to even things up. I really like the fidelity website, though a little less now that they changed it slightly. I locked myself out of vanguard, so not sure about that one. Are you locked out because you entered the wrong password too many times? Most of that security control automatically resets after a period of time. Some website take only 30 minutes to reset and let you try again. Others might take as long as 24 hours.
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Lizard Queen
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Post by Lizard Queen on Jul 11, 2020 19:56:18 GMT -5
I have both fidelity and vanguard. My dad started my Fidelity account for me to transfer some money into a Roth. He gifted my brother and sister, to help them out, and wanted to even things up. I really like the fidelity website, though a little less now that they changed it slightly. I locked myself out of vanguard, so not sure about that one. Are you locked out because you entered the wrong password too many times? Most of that security control automatically resets after a period of time. Some website take only 30 minutes to reset and let you try again. Others might take as long as 24 hours. Yes. I needed to call a number. I didn't bother for a while. It's now been a year or two. I'll get back to it when I sense another good buying opportunity.
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lynnerself
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Post by lynnerself on Jul 12, 2020 9:48:12 GMT -5
My two kids are in their 30s and I continue to match whatever they put in their Roth IRA's each year as an incentive. So far it's been maxed each year.
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