Message Font: Serif | Sans-Serif
No. of Recommendations: 0
[[My wife and I would like to start investing for our 1 year old. Presumably, this money would be for
college, but since our daughter can't speak yet, I would like to choose a vehicle that is flexible
enough to accomodate the possibility that she will not go to college.]]

Good thinking. But making long term plans makes for difficult decisions.

[[ I have therefore been considering either a Roth IRA in my name or a DSP/DRIP in her name. We
will be starting the account with her gift money (birthday, x-mas, you're cute, etc.), so since it has
already been taxed, I don't see the point of putting it in an education IRA.]]

Why not? An additional $500 per year can only help. And, even if your child doesn't go to college, these funds can be transferred to another sibling for college expenses. So the Ed IRA is really a nice supplement.

[[ I am leaning toward the DSP/DRIP as the most flexible vehicle. I don't anticipate that she will have
any significant taxable income for the next 15 to 20 years, so any stock earnings should be
effectively tax free during that period.]]

But you will STILL want to go to the Taxes FAQ area and read my post on the kiddie taxes, gifts to children, gifts in general, and custodial accounts. You'll also want to read some of the excellent posts in the last two or three days by DowDanny and William Lipp. There is a lot of good information there.

Once you do the reading, you may have a better understanding of what you are up against. It may help you to narrow down your questions.

TMF Taxes

Want to learn more about taxes and investing? Then we have a deal for you!! The Motley Fool Investment Tax Guide is now available through Fool Mart. Be the first one on your block to own this masterpiece. It'll help you with your 1998 taxes, and it's never to early to start planning for your 1999 taxes. So just click on this link ( to read more about this amazing collection of tax information. (Apologies for the shameless plug…but it is a pretty good book…if I do say so myself). In addition, if you would like to visit the Taxes FAQ (Frequently Asked Questions) area, click on and you'll be right at the home page. Check it out. Finally, if you need to get to the IRS web site, click on to go directly there.
Print the post  


In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.