Advice on how to invest child's B-day money...

Discussion in 'The Okie Corral' started by XDRoX, Apr 29, 2012.

  1. jpa

    jpa CLM

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    I agree with the suggestions for a 529 plan or buying prepaid tuition. Check your state treasurer's web site for details. Both plans have options if the child doesn't want to go to school or doesn't want to attend a state school. If the child dies or something happens where they don't want to or can't attend school, the 529 can be transferred to another family member. Pick out some low-cost and conservative mutual funds, expect around a 7-8% rate of return. Way better than a savings account or a CD.

    I agree that $7k for a 3 yr old is a lot of savings. I averaged around $200-$300 per year for birthdays and christmas. In HS I used the savings to buy a computer for homework.
     
  2. IndianaMatt

    IndianaMatt

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    I think that if I was your son, I would ask that all this money be invested in ice cream and a Red Ryder BB gun!
     

  3. Steve0853

    Steve0853

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    It sounds like you and your family are pretty well to do. I would save carefully, but wouldn't spend a lot of time agonizing over this investment or that investment for their college fund.

    If they are really smart and capable of college level studies, is it really going to matter whether they have $364,905.22 or $377,809.66 in the account??
     
  4. hamster

    hamster NRA Life Member

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    A 529 is not a bad idea. Here in ohio, I Max out my contribution each year to the level I get a tax deduction from Ohio. I think it comes out to $130/year tax savings which beats a savings account.

    We also keep multiple 529 plans for my son. Keep in mind, he can have multiple... your parents could have one as well and also get the tax deduction.

    Sometimes though getting a good financial advisor can be well worth the cost in the long run. Just make sure you don't put all the eggs in one basket ala Bernie Madoff.
     
  5. ggarciatx

    ggarciatx Cold War Sailor

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    Colt 6920 and Glock 17 now for his future in case he cannot get them when he is old enough and these are grandfathered in. a 1,000 rounds for each would be good. Can be sold later on if he has no interest.
    the other 5,000 in a 529. At your rate, he will still be getting money for a few more years, so put it in the bank or more 529s. The time to act on the Colt and Glock is now.
    Just some advice.
     
  6. Bilbo Bagins

    Bilbo Bagins Slacked jawed

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    :rofl:

    umm NO, you will regret it when gold is at $600 an ounce!!
     
    Last edited: May 1, 2012
  7. tarpleyg

    tarpleyg

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    I January, I took the money that both my girls had accumulated over the last couple of years and bought Silver Eagles. I plan to do that every year from here on out with the money I contribute to their savings accounts. They will end up with a sizeable lot of silver in 15-20 years.

    Greg
     
  8. wjv

    wjv RIP Stan Lee.. . .

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    Invest in Solyndra
     
  9. edcrosbys

    edcrosbys

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    I'd vote to split it 50/50 in 529 and mutual funds. The 10% hit for pulling surplus out of a 529 sucks!
     
  10. Glocksanity

    Glocksanity

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    Okay, just give me a specific stock or fund or index that will outperform gold and silver over the next 15 years.

    Let time judge the investment, not emoticons.
     
  11. Glocksanity

    Glocksanity

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    Smart man.
     
  12. RWBlue

    RWBlue Mr. CISSP, CISA CLM

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    My understanding is that the issue with Gold and Silver is the cost of getting in and the cost of getting out and theft.
     
  13. 07 LMB Z06

    07 LMB Z06

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    I'm no expert on Janus, but when I was helping my parents with some of their finances the first thing I suggested was ditching their Janus Funds. The expenses were high and the performance wasn't there. I found a couple ETF's that matched the investment objectives while outperforming Janus significantly and reducing their fees by ~90%.

    In short - for any mutual fund you find check for an ETF with a matching investment objective. Generally the annual fee will be lower, and the performance should be very similar.
     
  14. RWBlue

    RWBlue Mr. CISSP, CISA CLM

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    TD Ameritrade has a nice app for comparing ETFs and Mutual funds. After spending a good bit of time, I came to the conclusion that the best performing mutual funds were better than the best performing ETFs. This was looking at past performance and sharpness including fees. (The exception is if you could find a ETF that was undervalued when you get in and overvalued when you get out. But that is not how my luck runs.)

    Just for fun, what ETF would you recommend, if I recommended YAFFX?
     
    Last edited: May 2, 2012
  15. certifiedfunds

    certifiedfunds Cosmopolitan Bias

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    Those mutual funds won't grow tax free. Besides, who says you have to pull out the surplus, assuming there is one?
     
  16. certifiedfunds

    certifiedfunds Cosmopolitan Bias

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    You've got transactional costs buying and selling funds....trading fees, bid-ask spread. You're buying at a premium and selling at a discount there too.

    Risk of theft, too.
     
    Last edited: May 2, 2012
  17. certifiedfunds

    certifiedfunds Cosmopolitan Bias

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    How many years have you been saying that now?
     
  18. edcrosbys

    edcrosbys

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  19. RWBlue

    RWBlue Mr. CISSP, CISA CLM

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    There are maintenance fees, but the funds I am using do not cost at buy in or selling. There is just one price per day based on the value of the assets.

    I don't know of a local place I can buy and sell gold/silver at reasonable fees. How much is spot price today? How much can you by for? How much can you sell for? At your location.

    Assuming you are dealing with a larger firm, risk of major theft is minimal. Risk of minor theft is still there, but the larger firms like to fire employees and toss them in jail for theft.
     
    Last edited: May 2, 2012
  20. certifiedfunds

    certifiedfunds Cosmopolitan Bias

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    Account fees and the bid-ask spread is there though you might not see it. The transactional costs you're referring to with gold are essentially the bid ask spread. They're in the funds and in the stocks within the funds.

    Plus you're forgetting about expense ratios.

    What happened to folks who owned funds invested in Tyco? Enron? Fannie/Freddie? Real estate?

    Answer: They were stolen from.
     
    Last edited: May 2, 2012