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Started By
Message
Savings for future grandchildren
Posted on 12/5/24 at 8:13 am
Posted on 12/5/24 at 8:13 am
It’s still very early but found out we are going to be grandparents.
When I was born my grandma started buying me savings bonds, she passed when I was 4 so there weren’t many but it was a few thousand dollars when I turned 18.
I started thinking of what I could do for mine, 529? Is that college only?
Savings account or CD that rolls over?
Is the account in the kids name or the parents?
I appreciate any guidance or ideas
When I was born my grandma started buying me savings bonds, she passed when I was 4 so there weren’t many but it was a few thousand dollars when I turned 18.
I started thinking of what I could do for mine, 529? Is that college only?
Savings account or CD that rolls over?
Is the account in the kids name or the parents?
I appreciate any guidance or ideas
7
Posted on 12/5/24 at 8:18 am to LSUJML
Props to you for doing this for your future grandkids. What a blessing that’ll be for them one day.
This post was edited on 12/5/24 at 8:19 am
Posted on 12/5/24 at 8:23 am to LSUJML
Many droppers are watching for this guidance. I used 529’s for my two and both are now in college, but there may be better alternatives.
Posted on 12/5/24 at 8:39 am to LSUJML
529 is education based, however starting this past year I believe you could roll $35,000 over to Roth IRA if there is leftover. 529 can pay for school and student loans. That one is solid, but also a little risky as we do not know what education will be like in 18 years.
You can open custodial accounts, where when the child is 18-25 years old they take over the account. You would be in charge until then.
Some Brokerages as well will let you open accounts
You can open custodial accounts, where when the child is 18-25 years old they take over the account. You would be in charge until then.
Some Brokerages as well will let you open accounts
Posted on 12/5/24 at 9:02 am to LSUJML
enjoy your money. They'll appreciate what they earn themselves more and will be less likely to take things for granted.
Posted on 12/5/24 at 9:11 am to notsince98
quote:
enjoy your money. They'll appreciate what they earn themselves more and will be less likely to take things for granted.
Or they’re raised right and thankful for the incredible opportunity to get ahead at a young age. Things like this can set your family up for lifelong financial success
Posted on 12/5/24 at 9:19 am to LSUJML
A generation-skipping trust.
Posted on 12/5/24 at 10:59 am to Mingo Was His NameO
quote:
Or they’re raised right and thankful for the incredible opportunity to get ahead at a young age. Things like this can set your family up for lifelong financial success
Study after study just shows that doesn't happen. No matter how well someone is raised, people dont respect things received as much as things earned. Society would be better off realizing this.
are there exceptions? sure, but you'd really need to dig into the details of why.
Posted on 12/5/24 at 11:01 am to notsince98
quote:
Study after study just shows that doesn't happen.
Link?
Posted on 12/5/24 at 11:22 am to notsince98
My personal experience says otherwise. I have no idea of how many people that I worked with through the years got money and support like that from grandparents and parents, but the people I knew who had the most money and knew the most about money, finance, and investing went to college on money the grandparents furnished, and many had cars the grandparents bought for them.
My parents got nothing or next to it from their parents, and they gave me plenty of support of the most valuable kind that can't be measured in money, which is essential to the degree of success that I have, but any money for college was impossible for the first three years or so, they had a little after that, but I worked and did student loans (all long repaid).
That being said, the richest kid in college I knew had to explain every last little purchase to his father and his father fought him on every expenditure even though it was money in a trust that his grandfather had left him. His father wouldn't even allow him to have a local bank account because he couldn't control it (It was the 1980's. Checks were still a thing). My brother is the same way with his kids to this day (oldest about 30). Back then, I had more money on my hip pocket at any time, knew what I could spend and what I couldn't, and made my own choices. When my parents could give me money, they just gave it to me and trusted me to spend it wisely.
TIFWIW, but if I'd have had a financial education about investing and finance in those days, I would be much wealthier today. That's worth more than any money you can give your grandchildren. So, in short, I favor an approach that would teach kids about investing and finance, something they could watch grow and understand, and maybe something like matching whatever earned income they have but putting it in a Roth IRA.
One other note: My grand parents were all born in the late 19th century. I was born in 1965. My mother's parents were the younger, but were both gone before I was born. My father's were gone by the time I was 6 years old, so I have no idea what it's like to have grandparents actually involved. My parents were never in a position to do anything beyond birthday and Christmas gifts for their grandchildren.
My parents got nothing or next to it from their parents, and they gave me plenty of support of the most valuable kind that can't be measured in money, which is essential to the degree of success that I have, but any money for college was impossible for the first three years or so, they had a little after that, but I worked and did student loans (all long repaid).
That being said, the richest kid in college I knew had to explain every last little purchase to his father and his father fought him on every expenditure even though it was money in a trust that his grandfather had left him. His father wouldn't even allow him to have a local bank account because he couldn't control it (It was the 1980's. Checks were still a thing). My brother is the same way with his kids to this day (oldest about 30). Back then, I had more money on my hip pocket at any time, knew what I could spend and what I couldn't, and made my own choices. When my parents could give me money, they just gave it to me and trusted me to spend it wisely.
TIFWIW, but if I'd have had a financial education about investing and finance in those days, I would be much wealthier today. That's worth more than any money you can give your grandchildren. So, in short, I favor an approach that would teach kids about investing and finance, something they could watch grow and understand, and maybe something like matching whatever earned income they have but putting it in a Roth IRA.
One other note: My grand parents were all born in the late 19th century. I was born in 1965. My mother's parents were the younger, but were both gone before I was born. My father's were gone by the time I was 6 years old, so I have no idea what it's like to have grandparents actually involved. My parents were never in a position to do anything beyond birthday and Christmas gifts for their grandchildren.
This post was edited on 12/5/24 at 11:28 am
Posted on 12/5/24 at 11:47 am to CharlesUFarley
Yeah, I agree with this. Not sure how anyone could hate on a grandparent for trying to set there grandchild up for a better financial future. It doesn't sound like the OP is talking enough money to make them leeches on society? But enough to help with a down payment on a future home? Enough to cover college tuition and not leave them saddled with debt afterwards? Man what a blessing.
My parents/grandparents weren't in a position to do that for me, but my wife's grandmother started her a fund when she was a child and we used that money as apart of a down payment on our first home. It wasn't a life changing amount (probably 5% of the down payment) but it was massive for us. I never got to meet her grandmother, but I wish I could to hug her neck.
Obviously not every kid will use the money as intended, but that's not something you can (fully) control. All you can do is the best you can and hope that they take advantage of the opportunity that this will afford them.
My parents/grandparents weren't in a position to do that for me, but my wife's grandmother started her a fund when she was a child and we used that money as apart of a down payment on our first home. It wasn't a life changing amount (probably 5% of the down payment) but it was massive for us. I never got to meet her grandmother, but I wish I could to hug her neck.
Obviously not every kid will use the money as intended, but that's not something you can (fully) control. All you can do is the best you can and hope that they take advantage of the opportunity that this will afford them.
Posted on 12/6/24 at 9:39 am to LSUJML
Not sure how much money you have so that is a big factor. I funded an online account for each of my kids and grandkids. Not life changing amounts. Decided to not do the 529 with so many uncertainties. I will occasionally add some money to each. A big part of my motive is to use it as a way to try and create interest in them to learn about investments. My wife and I have a sit down meeting with each to discuss when we add to it. The results have been mixed so far as to the kids showing interest but a couple of them have added some of their own money, so some success.
Good luck.
Good luck.
Posted on 12/6/24 at 1:26 pm to LSUJML
529 has a lot of flexibility.
Posted on 12/6/24 at 2:16 pm to dstone12
quote:Depends on the caliber of the generation you choose to skip.
A generation-skipping trust.
It's appropriate in some situations.
It's a real "F-Y" to good kids.
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