I’m not sure about you, but there are five things I invest in for my kids because I want them to have a strong financial foundation and opportunities that can benefit them for years to come.
1. A 529 Plan
The first investment I make for my kids is a 529 plan.
A 529 plan is a tax-advantaged account designed to help save for education expenses. The money grows tax-free, and when used for qualified education expenses, withdrawals are generally tax-free as well.
College costs continue to rise, and starting early gives the money more time to grow. By consistently contributing to a 529 plan, I’m helping prepare for future education expenses while taking advantage of potential tax benefits.
2. A Roth IRA
The second investment is a Roth IRA.
Many people don’t realize that children can contribute to a Roth IRA if they have earned income. Because I have a business, I can engage my kids in the business and teach them how to earn income through legitimate work they perform.
Once they have earned income, that money can be contributed to a Roth IRA. The benefit is that the money can grow tax-free for decades. Starting young gives them a tremendous advantage because they have time on their side.
More importantly, it teaches them the connection between working, earning, saving, and investing.
3. Cash Value Life Insurance
The third investment is a cash value life insurance plan.
For children, this type of coverage is often very inexpensive because they’re young and healthy. In addition to providing life insurance protection, cash value policies can build value over time.
As they get older, around age 21, I can explore adding riders such as critical illness, chronic illness, and other long-term care benefits, depending on the policy and eligibility requirements.
It’s one more tool that can help provide financial protection and flexibility throughout their lives.
4. UTMA Accounts
The fourth investment is a UTMA account, which stands for Uniform Transfers to Minors Act account.
These are custodial investment accounts that allow money to be invested on behalf of a child. The funds can be invested and have the potential to grow over time.
What I like most about UTMA accounts is that they create opportunities for kids to learn about investing. They can see how money grows, understand how markets work, and develop good financial habits early in life.
5. Teaching Personal Finance and Investing
The fifth investment is one that doesn’t involve opening an account.
I invest time teaching my kids about personal finance and investing.
Understanding how money works is one of the most valuable skills a person can develop. Learning about saving, investing, budgeting, and building wealth can have a lasting impact not only on their lives but on future generations as well.
If you don’t know what to teach, it can be difficult to help your children develop these skills. That’s why continuing to learn about personal finance yourself is so important.
For me, these five investments work together:
- A 529 Plan
- A Roth IRA
- Cash Value Life Insurance
- UTMA Accounts
- Financial Education
Each one serves a different purpose, but together they can help create a strong financial foundation and teach valuable lessons about money, responsibility, and long-term planning.
If you want to know more about how you can learn personal finance so you can help yourself, your kids, and future generations, reach out today. I’d be happy to share resources to help you get started.
You can also book an appointment with me here.