What are the Investments that May Benefit Your Kids
Our children have some much ahead of them and as parents, we should prepare for the future of our kids. You find that you never know if you will be there for them and this is the time you should start saving and making investments. Here are some of the long term investments that will benefit your kids.
The first thing that we are going to look at is 529 plan. The 529 plan is a state or state agency-sponsored savings plan that is designed to encourage saving for the future higher education of designated beneficiary. This is one of the most common ways parents can save for their children. In this case, all the 50 states offer at least one 529 accounts making it accessible to families within the United States. Apart from that, it is also possible that you can enroll in an out-of-state 529 savings plan.
Besides, you should also invest in mutual funds. You should know that mutual funds are a financial vehicle that is made up of a pool of money collected from many investors and the money is then invested in securities such as stocks, bonds, and short term debt. This combined holdings or grouping of financial assets of the mutual fund is referred to as a portfolio. Investing in mutual funds will mean that you buy share with it and each share represents an investor’s part ownership in the find and the income. Here we have four types of mutual funds which are money market funds, bond funds, stock funds, and target date funds. It is essential to note that we have subcategories, one of which is based on the size of the companies invested. In case you prefer to start small you need to choose from among the best stocks under 5.
Besides, we should also invest in a custodial account. It is essential to note that this is a type of account that one person opens and maintains for another person. In most cases, parents open these accounts for their children below 18 years. , In this case, the parents will be depositing the money and managing the accounts until when the child is of age.
Apart from that, we have a custodial IRA. Where you can either set up traditional or Roth IRA depending on the type of tax management you prefer. The best one is always Roth IRA to most parents because of its flexibility and reasonable contribution terms. The good news is that the parents can contribute up to $5,500 and the money is not tax deductible, and the withdrawals can also be penalty-free.