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Brokerage account for a kid


shalab
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How old is the child?  Do they have an earned income?  Can you (or others) pay then to do legitimate work (chores, etc)? 

 

Set up a Roth IRA (you need to have earned income).  I have one set up for my godson at TD Ameritrade.

 

Benefit of a Roth IRA for a child is most minors will not earn enough money to pay taxes.  So you pay 0% putting the $ in, and you pay 0% taking the money out. 

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For my kids I've set up two accounts each; a Coverdell (which I fund) and a regular taxable account.  When they have earned income I would look at a Roth.  All of these are at Tradeking--I can't say signing them up for the esoteric accounts was the most straightforward thing, but after they're up I have no complaints.  I was able to associate all the accounts with my login ID so I can access them via my account.

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I've had UTMA accounts setup for my kids for years.  Instead of retyping everything I'll just link to this discussion here from 2009 where I wrote about how I set them up.  I've been actively managing their accounts for them and they each have over $6K in them now. My kids are now 13 & 12 yrs old.  Yes, being a UTMA account means the money will be theirs on their 18th birthday to do with as they please.  This isn't a college fund, it is their money, from birthdays, Christmases, doing jobs/chores, and anything else they can scrape up. We have a large property with animals(chickens, goats, rabbits, and a dog), they do earn their allowances.

 

Re: How Do You Teach Your Family About Finance or Business?

 

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Sharebuilder might be a good option. They are currently running a deal where they give you $100 in your account if you deposit 5k, for taxable accounts only. Their trade commissions are 6.95. I don't know if they still do this but they used to offer $4 commissions on scheduled investments if you want to do dollar cost averaging. Also setting up drip is really easy. The one downside is that they generally do not offer less liquid securities. For example I don't think you can trade the TARP warrants. But overall I think its a good option for someone who is just getting started.

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