Hello,My sons 17th birthday is this week and I'd like to open a Roth IRA for him as one of his presents. I'm quite sure he will not see the value of this right now, but will in the future I suspect.I would like recommendations on where this can be done relatively quickly, preferably online if possible.I'm thinking some sort of S&P index fund?Any recommendations for a good long term fund?Also, are there any tips to opening a roth in a childs name? Wonder how that works???ThanksWayne
Does he have any income? He will need earned income at least equal to the amount of contributions made to the account.IF
Nope, no income at this time. So I guess that means a roth is out?What other long-term investment vehicle would make a good present???
What other long-term investment vehicle would make a good present??? A plain taxable account might be cool, to a 17 year old. Fund it with a few $'s and make 4 or 5 purchases. (Companies that make some of the things he likes) ... Leave enough for him to make a couple purchases as well.Don't worry about transaction costs here, this is more to get him interested in stocks.I'd look at Sharebuilder or something similar where you can purchase partial shares, so that way you can buy things that trade for more than $50. I'd put a bit of SPY to help understand ETF/Indexs, and why sometimes its a good idea to just follow the market. A bit into whoever makes some clothing/shoes he likes. A bit into a restaurant he like to eat at. That sort of thing. That way when he is out with his friends eating somewhere he can say "I own a piece of this place, everytime you guys buy something, you're making me richer" :).Then for his portion talk with him about what makes a good investment, why to buy/not buy things (like buying cause you like the product probably isn't a good idea :). Then let him pick what he wants to invest in. Don't worry about good/bad investment. Consider this his play money for now. Talk with him about trading costs, let him play ... let him lose it all if thats what happens. But you stay connected with what he is doing in the account, and give advice.Just my thoughts.Laters,-d.
Also, are there any tips to opening a roth in a childs name? Wonder how that works???It's custodial until the age of majority in your state. I had a good experience with Scottrade on both custodial ROths and UGMA accounts - both opening them and then transferring them to the child's name only. $500 minimum/$7 tradesRoth requires earned income. What we did instead of just giving Roth money was to match their contributions. It's worked out pretty well.rad
What other long-term investment vehicle would make a good present??? Maybe savings bonds -- can't cash at all for a year, then have a penalty for the next four years.
I really Like -d's suggestion.Let me add that if you set this up at one of the popular discount brokerages (Fido, Schwab, ETrade, etc) they most likely have stock research for account-holders, which you could use to take your son into and teach him some of the fundamentals you look for in stock selection, such as P/E ratios, dividend growth, etc, etc. You could make the initial buy's, and then let him do some research and then you and he talk about when something should be sold, bought, etc. And as a reward, at the end of the year, transfer the dividends to his checking account (of course, the feasibility of this depends on the initial investment amount.Many of us I'm sure wish someone would have provided some basic investment information early on in our lives.BruceM
Well that was a bit frustrating. I just tried to use scottrade to open a custodial roth IRA, and went through all steps online only to have it tell me I need to print out the application and bring it into to the office to complete the process... So much for doing this online. Very frustrating.
You could always set him up with a few DRIP stocks and make sure he knows to just let them grow. Unless in the previous year maybe you paid him (wink) for things like yard work and would be able to do match that amount in. Not sure exactly how that works if the amount has to equal or less to what is reported to IRS since it could be a low amount like $500. May be worth looking into further.
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