The Motley Fool Discussion Boards

Previous Page

Financial Planning / Tax Strategies

URL:  https://boards.fool.com/my-cousin-wants-to-encourage-his-interest-in-34675650.aspx

Subject:  Re: Brokerage account for child Date:  11/22/2020  8:58 PM
Author:  2gifts Number:  131351 of 132640

My cousin wants to encourage his interest in investing and wants to know if she should open a brokerage account in her son’s name or in her own.

If the money belongs to the child, then the account should be in the child's name. Your cousin will need to open a UTMA or UGMA (varies by state) in the child's name with herself as the trustee since the child is a minor. Pretty much any brokerage will have these accounts, but there may be a higher minimum than that $500, so he might have to save up a bit.

If the child is interested, perhaps the parents can match his funds which will teach him about matching funds such as in a 401k, give him incentive to save, and have his savings grow that much faster.

I have posted quite a lot over the years about how I did this with my kids from a very young age. We used to match anything they put into stock whether that came from their allowance, earnings, or gifts. My kids also had Roth IRAs once they started earning money with pet sitting and baby sitting and such when they were around 10 or 12.

Remember, though, that this money belongs to the child, and once the child reaches age of majority, they can use the money however they want, so it behooves the parent to ensure that the proper financial lessons are being taught along the way.
Copyright 1996-2021 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us