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  1. #1
    Banned
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    Nov 2010
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    Chicago suburbs
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    Investment vehicle for my grandson

    He's going to turn 1 next month. I'm tossing around starting a college fund for him and/or if he doesn't do the college thing, something he could cash in at a later date to use for a wedding or down payment on a house. Just looking for ideas on where to start. I haven't contacted my broker yet and not sure if I need to. I'm thinking moderate risk and low fees. Is this something I can do pre-tax? Suggestions?

  2. Member
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    Oct 2015
    Location
    Baltimore
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    379
    #2
    Not exactly in line with your thoughts but I would open an individual account in your name and just buy the s&p. Either spy, sso or Upro. Don't trade it, just add to it when you can. 18 years from now he will be very wealthy for a hopefully mature young man. My reasoning is individual accounts have the least amount of rules and gotchas attached. Are they tax exempt? No but you won't pay taxes until you sell. 5k in taxes on say 60k in profits 18 years from now. Who cares IMOP. Just don't expect your F/A to agree with this. He makes no commission and can't take a 1% annual cut on this idea.

  3. Member
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    Nov 2011
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    Coral Springs, Florida
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    #3
    The only thing I know of that would be tax exempt would be a 529 Plan but that has to be used for higher education expenses. I don’t think you can do any type of IRA because they need to have earned income. There are also Kiddie Tax issues on unearned income. If this is something you are going to build over the years then I would advise speaking with a Certified Financial Advisor that is fee based. Better to get it right from the beginning because taxes can take a big bite out of returns.

  4. #4
    You can open up a 529 or coverdale for college or you can do a UTMA or UGMA.

  5. Member
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    Jun 2006
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    Wisconsin
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    5,101
    #5
    I don’t think a 529 plan has any tax advantages for you as a grandparent. If he doesn’t use it for college, it becomes taxable to him at that time.

  6. Banned
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    Nov 2010
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    Chicago suburbs
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    #6
    Quote Originally Posted by Bassin08 View Post
    I don’t think a 529 plan has any tax advantages for you as a grandparent. If he doesn’t use it for college, it becomes taxable to him at that time.
    This is what I've found. Just shot an email to my investment guy. The baby's birthday is in a few weeks

  7. Member
    Join Date
    Jul 2012
    Location
    Palm Beach Gardens, FL
    Posts
    14
    #7
    Do a little research on Berkshire Hathaway. Trades under BRK.B or BRK.A. Very stable with a terrific track record long term. Has made a great investment for long term investors.

  8. Member
    Join Date
    May 2017
    Location
    Hickory NC
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    429
    #8
    You can put up to $250k in a 529, it can be used for any expenses as long as it's education related even during Jr and Sr high. If it isn't used for that it can be rolled into a Roth IRA and the only taxes to be paid are on the gains, if they don't touch it until they are 591/2, for a young person the saving is greater due to them being in a lower tax bracket, if they need it for a non qualified expense. The is what I was told by my financial advisor.

  9. #9
    I'm pretty sure you cant roll a 529 into a Roth. You can cash out the 529 and contilribute to a Roth still within the annual limits