I've been looking for somewhere to invest money for my daughter's future...I keep getting these in the mail. Does anyone know anything about this and have an opinion on it either way?
Thanks!
I've been looking for somewhere to invest money for my daughter's future...I keep getting these in the mail. Does anyone know anything about this and have an opinion on it either way?
Thanks!
The company is solid, but the value of the insurance is really not worth the expenses. Life insurance for children is very inexpensive (because the risks of death are slim) but as a savings vehicle it is not efficient. The only real value of such policies is as a cheap burial insurance in the rare and debilitating event of a childs death. (Sort of liek buying airplane flight insurance)
If you want to save for a child with a long term perspective either go with an education fund or buy a few shares in a broadly diversified solid company with good prospects. An (one of many) example of such a company is Proctor and Gamble. And reinvest the dividends. Or buy a spider an equivalent of shares in the S&P 500.
I must disclose that I own P&G shares but I was using that as an example of a "type" of company not a specific recommendation.
Great Topic, Venus. I get those offers in the mail almost every week. I also got one with my daughter's hospital pictures after she was born. Growing Family (The picture company) offered to pay for the first year of the insurance. I didn't go for it then though.
Thanks for the information, Monty. For my other 2 kids, my own insurance that my mother had since birth for me, had a rider on it, where my kids could be added. So that's what I did for them.
Hubby now has the option at his new job to get Life Insurance for the baby and myself as well. So we're definitely looking into doing that. When I have more information, I'll post, to get opinions on if it's a good option or not.
Is what you are talking about called "blue chip" stock? Can I walk into any brokerage firm and tell them that I want to open an account for a minor (well, I guess it would be a custodial account).Originally Posted by montythegeek link=board=6;threadid=11762;start=msg150141#msg150 141 date=1091754762
Where can I find more information (so that I am more informed when it comes to actually doing this)?
Thanks!!
usually you have to have a large amount of money to invest through a broker as they take a comission. My brother is a broker.
But if you have the 300k or so, go for it!
try online sites for stocks maybe? sharebuilder.com and many others.
You can go onto yahoo and check different graphs .. and see how the stock has played out for the last year or so.
Maybe go with a few solid companies. I like pharm. like pfizers, but i have heard they are not the best to invest lately.
VG,
The type of investment I am referring to falls into that category, but I would recomend a company with a broader focus so that it diversifies itself. Take a big company with a lot of products like P&G--its product mix means it has fingers in a lot of pies as compared to McDonalds which sells fastfoods or GM which sells vehicles and finances them and not a lot else. A P&G sells soap and coffee and diapers and prepared food, cosmetics, and some drugs -unexciting stuff maybe, but stuff you use everyday and to all over the world.
So it is like buying a mutual fund in one shop. TFD is correct that there are comissions but if you wanted to invest say $300 (not $300K) you can do this for a one time charge and get the stock certificate--then enroll in the companies Dividend reinvestment program or DRIP. Then the company does the bookkeeping rather than the broker and charges no fees for further purchases and you can add to shares in the account by periodically adding funds. What eats into an account like this are periodic fees--like if VG Jr had a checking account-not the one time fee of about $30.
Once you set up
1 . the purchase ***remember the words Uniform Gift To Minors Act*** at any brokerage firm or larger bank (know VG Jr's Soc sec #).
2. You want to get the stock certificate rather than set up an ongoing account there that will have periodic account fees. For this transaction forget the adds for $7 trades--those are large volume rates for frequent transactions.
3. Then enroll in the Dividend reinvestment program.
I typed "stocks for children" in a search engine and got this among a lot of other links
http://abcnews.go.com/sections/busin...il_021202.html
The last paragraph list a few links for companies which people who make a business in these kinds of transactions.
The other way I mentioned the SPDR (spider) has a bit more ongoing account fees associated with it since there is more paperwork involved but is more diversified. If YOU have an account somewhere you may be able to save a few $ by buying 5-6 shares or something, have them issued in your name, then have the stocks transfer agent transfer them to your child's name--more effort on your part but you save a few dollars--think of it like buying a card to give them a check.
Again P&G is a stock I own mentioned as an example, not nessarily a recomendation. If someone did want one, I would say yes and then company just reported a 40% year-on-year profit gain and has a great track record except for about a year from late-1999-2000.
Any brokerage firm will know the policies that apply to small kids accounts and exactly what you want to do will depend in how much money you want to invest eventually.
I've known a lot of people who start investing with less than $300k...Originally Posted by tampafldancer link=board=6;threadid=11762;start=msg150280#msg150 280 date=1091769694
Wow!! Thanks for the info! Mmmmmmwah!Originally Posted by montythegeek link=board=6;threadid=11762;start=msg150435#msg150 435 date=1091791993





Before you get seriously involved in making investments for your daughter's future, there's a concept which need to be understood.
First, you're immediatlt faced with the choice of making these investments in your daughter's name or your own name. The Uniform Gift to Minors act basically requires that you transfer ownership of whatever investments are involved to your daughter at the time they are purchased. You administer them but you do not own them. This has the advantage of having any taxes on those investments charged to your daughter (which is usually advantageous but not always). This also has the disadvantage that you can never recant the gift, meaning that when your daughter turns 18 or 21 that she can cash in the investments and use them in any way that she chooses.
If however you make these investments in your own name with the thought in mind that they will someday be used for your daughter's benefit, you'll be taxed on them at your own rate. But you will remain in control of the investments in the event that your daughter decides to blow off college and run off to Europe when she reaches age 18 or 21.
Get her a life insurance policy that accrues a cash value- that's what I did when my daughter was a baby.. its also a very smart choice in terms that you can borrow against it when she is older for weddings, college etc.
If you need information, let me know. I used to work for a large life insurance company (that services people all over the country) I'd be glad to point you in the right direction.
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Melonie brings up a good point about ownership of the account and tax implications. One thing to consider is the kid having the assets, just in case they turn out to be irresponsible at that age, or blow it on a car they do not need rather than what you intended.
An advantage of an education savings account or ESA (formerly known as an education IRA) is that the account is in the parents name and is tranferable. If you have 2 kids and one does not want to go to college at all, you can have the account transferred to another beneficiary. Investments are tax free, but there are income limitations and it compounds free of federal income taxes (but not necessarily state). The parent can withdraw for nonqualified expenses with a 10% penalty and paying taxes on it (offsetting the compounding tax free advantage plus a little more but that little more goes down the longer the funds are there. there is a maximum 2000/year contribution tax advantaged.
This is a viable option which is more viable if you have 2 or more kids. Vanguard has a decent website at
http://flagship.vanguard.com/web/cor...catCollOV.html
I am not reccomending them as a vehicle since I know nothing about their program either way, good or bad. They just have a good web site and are a well established company. I imagine others do to but I found this one right away.
Gynger is absolutely right that the vehicle she describes CAN be used that way. If it is, or is not, a stupid thing to do is going to vary by the policy specifics. I am personally of the opinion that insurance should be used for insurance, rather than as a messy savings account, but I admit being a fuddy-duddy about that. I would rather a screwdriver be a great screwdriver than a screwdriver, bottle-opener, nail file, corkscrew and pen knife.
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