Investing for kids isn’t hard – if you know where to start. Parents often stress about providing for their children into adulthood and transitioning them to making their own money management decisions.
1. Custodial Accounts
The Uniform Gifts to Minors Act (UGMA) and Uniform Transfers to Minors Act (UTMA), also known as custodial accounts, allow you to put investments in a special account for a minor child or grandchild.
2. 529 Plans
When thinking of one of the best ways to invest $1,000 for a child or more each year, consider a 529 savings plan. These can help your child financially while limiting your own tax liability when you liquidate the investments held in the account.
3. Traditional and Roth IRAs
An Individual Retirement Account, or IRA, is a tax-advantaged savings account where you keep investments such as stocks, ETFs, bonds and other asset types.
4. Coverdell Education Savings Account
These accounts also allow you to put money toward qualified education expenses of K-12 grade schooling in addition to college costs.