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The title basically says it all. My 15 year old has some funds left after meeting the ROTH IRA limit. I was wondering whether its possible to open a brokerage under parents and contribute the left over funds to that to let it grow. Maybe someday for a down payment or as an emergency fund etc. I'm hesitant to open a brokerage account under her name due to FASFA, although I highly doubt we would qualify for financial aid.
And does it make sense to buy dividend stocks and have the dividend taken out as funds for daily living while doing higher studies?
The title basically says it all. My 15 year old has some funds left after meeting the ROTH IRA limit. I was wondering whether its possible to open a brokerage under parents and contribute the left over funds to that to let it grow. Maybe someday for a down payment or as an emergency fund etc. I'm hesitant to open a brokerage account under her name due to FASFA, although I highly doubt we would qualify for financial aid.
And does it make sense to buy dividend stocks and have the dividend taken out as funds for daily living while doing higher studies?
Thank you
Congrats on training your 15-year-old to be financially smart at such a young age.
You will have to pay taxes on the dividends but, sure, you can use those for living expenses. That is my plan once I decide to stop reinvesting my dividends and start taking them for expenses.
I use Charles Schwab, and they have a very low fee (0.06%) dividend equity etf (SCHD) that sports a 3.3% distribution yield. Top holdings right now are Texas Instruments, Lockheed, Chevron, PepsiCo, Coca Cola, and so forth. By putting a teenager into such a fund, they would receive current income and also benefit from price growth.
At my age, I prefer to buy gas and electric utilities which yield between 4-5% without requiring me to sell any shares.
There are other low-fee etf and mutual funds in other families (e.g. Fidelity, Vanguard) and I am sure this thread will get deluged by other posts offering advice and, of course, criticizing my suggestion.
BTW, I had my adult son and daughter open Schwab accounts which allowed them to open sub-accounts for each of their children. I help fund 529 accounts for each grand child under those Schwab accounts.
The title basically says it all. My 15 year old has some funds left after meeting the ROTH IRA limit. I was wondering whether its possible to open a brokerage under parents and contribute the left over funds to that to let it grow. Maybe someday for a down payment or as an emergency fund etc. I'm hesitant to open a brokerage account under her name due to FASFA, although I highly doubt we would qualify for financial aid.
And does it make sense to buy dividend stocks and have the dividend taken out as funds for daily living while doing higher studies?
Thank you
Your plan does seem a little backwards. Yes, start that emergency fund. For a 15 year old only need 3 months of expenses. Mostly have a put & take dream fund for other goals.
At age 15, I think there are two viable strategies:
1) put it all in a taxable account into a S&P 500 fund (VOO or SPLG or FNILX) or into a Total Market Fund (VTI or ITOT or FZROX) with dividends reinvested (do not use them for living expenses).
2) Put 3/4 into one of the above, and invest the other 1/4 by picking two stocks selected together with the 15 year old based on the 15 year old's view of the world. They have insight into what companies are doing well based on their exposure to daily living - it could be for example household name companies such as Apple or Starbucks or Verizon or 3M or Chevron or JP Morgan Chase or Home Depot or whatever. Put guardrails on this - make them Fortune 100-ish companies. The 15 year old will get to compare the two companies selected to the S&P 500 or Total Market Fund over time. Another guardrail is no trading - invest only.
We opened Fidelity Minors accounts for all of our grandchildren. I let them pick out of about 6 funds to invest.
I also gave them the deal that I would match whatever they put into their accounts. They can get to the money at age 18, hopefully by then they will understand what Investing will do for them.
The title basically says it all. My 15 year old has some funds left after meeting the ROTH IRA limit. I was wondering whether its possible to open a brokerage under parents and contribute the left over funds to that to let it grow. Maybe someday for a down payment or as an emergency fund etc. I'm hesitant to open a brokerage account under her name due to FASFA, although I highly doubt we would qualify for financial aid.
And does it make sense to buy dividend stocks and have the dividend taken out as funds for daily living while doing higher studies?
Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
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Definitely max the kid's Roths (not counted in FAFSA).
Investing beyond might best be suited by individual interests and objectives.
Some of ours preferred being , others, active traders (started at age 12). All were interested in starting their own business, as well as angel investing in businesses of others (friends). The majority of their friends (homeschoolers) had businesses, many had employees. Ours designed and built their own homes, which gave them a big economic headstart when they left for college at age 16. (Free in our state, instead of attending HS) good deal for tens of thousands of students per yr, Since 1993)
Encourage yours to invest and explore their interests. And to learn from successes and mistakes.
Age 15 is a good time for career and skill exploration, leading to early experience and significant life choices.
Welding, fabrication, woodworking, auto mechanics, cad, electronics, robotics, and.. finance! To name a few.
Location: Was Midvalley Oregon; Now Eastside Seattle area
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FAFSA is less important than ever before. The Guaranteed Loan is a loan and the terms must be stringently followed. The loan amount is becoming a smaller part of total post HS education/training.
We did the Custodial-UGMA/UGTM route at birth to age 22.
ref post #4. We gave son $10,000 (14, 1999) to select up to 5 stocks. I got chicken in yr 2000 and took the funds back at a 30% loss. Had I held my end of the deal, Son would be very well off today.
FAFSA. its not a great deal except to those who . really need the money. The terms are easy. The rate variable. The error rate by the processor, high. We are paying off a Consolidated loan with 3-4 years remaining because Navient says that we recently missed 2 payments (auto pay since 2004, @ 2.875%)????
Last edited by leastprime; Today at 05:47 PM..
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