Before we get to it, I just wanted to let you know that I'm teaching my FREE Live Investing Class this Wednesday evening). Save your seat here!

Kids have a huge luxury that we (as adults) are losing every day. And that’s TIME. That’s why investing for them is so crucial. They have time to take advantage of compound growth. And in the past 4-5 decades the best place to invest has - hands down - been the stock market. 

So which investment accounts am I using to invest for my kid? 

Here are the three:

1. 529 plans
2. Custodial Roth IRA
3. A brokerage account in the parent’s name

🔑 529 plans are a great place to invest for your kids' education. They can be used for college as well as up to 10K a year for private school. You can always change the beneficiary of this account, your investments grow tax free and can be withdrawn completely tax free as long as it’s used for educational purposes.

🔑 If you want to really create generational wealth, then look no further than the most magical of all of the investment accounts, the custodial Roth IRA. This is an account that you can open for your kid if they have earned income. Contributions grow tax free and have tax free withdrawals at retirement. Other pros are that because this is a retirement account, it is 100% sheltered from financial aid and the growth can not be accessed (without penalty) until they are 59.5.

🔑 And the last account is one that surprises many. I’m a huge fan of parents using their own brokerage account to invest for kids- you can open one and mentally earmark it for your kid - as opposed to using custodial brokerage accounts (UTMA/UGMAs). This is helpful to shelter assets from financial aid (parental assets have less of an impact compared to student assets in determining FAFSA/financial aid eligibility) as well as not giving an 18/21 year old complete access to the funds that you have been investing so hard in. These assets can easily be gifted to your kid at a later time tax free (using the lifetime gift tax exemption act).

Which accounts to invest in really depends on your goals for the money you are investing.

But no matter which you choose, investing is how we can create and build real generational wealth! Want to learn more about how to create generational wealth for your kids? Start HERE!

-Mahi

PS: Did this clarify which investment accounts you want to open for your kids? Any questions you have? Ask away during the Q&A of my FREE investing class!

Remember, you deserve this information.