How do I set my kids up for success?

[Anonymous]

Anonymous wrote:Just curious why you are going with Robinhood and not a more trusted company like Vanguard? Is the app more appealing? I know Vanguards interface is muy blah.

Grandpa is on line.

Chine, Robinhood, Revolut is where the kids invest.
Vanguard is the over 80 crowd.
Schwab and Fidelity over 50 crowd

[Anonymous]

Anonymous wrote:How do you/would you set your kids up for success? Not a 529 -
We have that- but with their own money from their first summer job? Roth IRA? Brokerage? Showing them graphs of savings? I want to make sure we’re making the most of this opportunity and putting them in control of their money for their lifetime in the right terms. Any thoughts??

You stop babysitting them. You stop giving them everything you want or they ask for.
You teach them how to fish instead.

[Anonymous]

Anonymous wrote:If you have the money gift them the max amount the IRS allows without having to declare the gift. Put it in a brokerage account and add to it every year. The limit is $18k for 2024. If they’re working you can max their Roth IRA with some of the gift money.

Sit down with them and show them a compound interest calculator. Show them how much money will be in that account when they’re 40, 50 and 60 if they let it compound.

Also if you can swing it fully fund college, help them with a down payment on their first home. For my recent college graduate I’m gifting him his rent for the rest of the year ($1000 a month) so he can get used to his paycheck and save for a small emergency fund.

OP perhaps asked a misleading question.

What you suggest above does in fact set your kids up for success...however, it doesn't set themselves up for creating their own success.

I mean, why stop at the above...why not pay for everything for your kid for the rest of their life?

It's funny how folks suggest giving their kids tons of money, but for some reason it always has to have some specified purpose. Free money is free money.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Just curious why you are going with Robinhood and not a more trusted company like Vanguard? Is the app more appealing? I know Vanguards interface is muy blah.

Grandpa is on line.

Chine, Robinhood, Revolut is where the kids invest.
Vanguard is the over 80 crowd.
Schwab and Fidelity over 50 crowd

My 20-year-old likes Fidelity. Guess my kid is an old soul.

Not day trading, so prefers are more stable company with better sweep and other financial offerings. Doesn't see any real additional/different benefit to at least Robinhood.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Just curious why you are going with Robinhood and not a more trusted company like Vanguard? Is the app more appealing? I know Vanguards interface is muy blah.

Grandpa is on line.

Chine, Robinhood, Revolut is where the kids invest.
Vanguard is the over 80 crowd.
Schwab and Fidelity over 50 crowd

I'm 36 and have millions in vanguard.

[Anonymous]

Anonymous wrote:

Anonymous wrote:If you have the money gift them the max amount the IRS allows without having to declare the gift. Put it in a brokerage account and add to it every year. The limit is $18k for 2024. If they’re working you can max their Roth IRA with some of the gift money.

Sit down with them and show them a compound interest calculator. Show them how much money will be in that account when they’re 40, 50 and 60 if they let it compound.

Also if you can swing it fully fund college, help them with a down payment on their first home. For my recent college graduate I’m gifting him his rent for the rest of the year ($1000 a month) so he can get used to his paycheck and save for a small emergency fund.

OP perhaps asked a misleading question.

What you suggest above does in fact set your kids up for success...however, it doesn't set themselves up for creating their own success.

I mean, why stop at the above...why not pay for everything for your kid for the rest of their life?

It's funny how folks suggest giving their kids tons of money, but for some reason it always has to have some specified purpose. Free money is free money.

Because there is a big difference between paying for college and just giving your kid $200K and hoping they use it well. Same for buying them a new car at 23 vs just giving them $30K and hoping they use it for a car.

In our family, we help the kids out. But they have good jobs and are perfectly capable of paying for these things themselves. However, for ex, right now, there is not need for my kid to take a car loan of 7%+. Sure they could and they can put $10K down and buy a new car and manage the payment. But why pay so much in interest? Or we can simply gift them the $36K for the year and let them own the car outright. Of course we know they will continue to save what "would have been the car payment" rather than send it on partying/vacations. If they were not as financially savy we might not do it

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Just curious why you are going with Robinhood and not a more trusted company like Vanguard? Is the app more appealing? I know Vanguards interface is muy blah.

Grandpa is on line.

Chine, Robinhood, Revolut is where the kids invest.
Vanguard is the over 80 crowd.
Schwab and Fidelity over 50 crowd

I'm 36 and have millions in vanguard.

Because that is the smart way to do steady reliable investing for a low cost.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:If you have the money gift them the max amount the IRS allows without having to declare the gift. Put it in a brokerage account and add to it every year. The limit is $18k for 2024. If they’re working you can max their Roth IRA with some of the gift money.

Sit down with them and show them a compound interest calculator. Show them how much money will be in that account when they’re 40, 50 and 60 if they let it compound.

Also if you can swing it fully fund college, help them with a down payment on their first home. For my recent college graduate I’m gifting him his rent for the rest of the year ($1000 a month) so he can get used to his paycheck and save for a small emergency fund.

OP perhaps asked a misleading question.

What you suggest above does in fact set your kids up for success...however, it doesn't set themselves up for creating their own success.

I mean, why stop at the above...why not pay for everything for your kid for the rest of their life?

It's funny how folks suggest giving their kids tons of money, but for some reason it always has to have some specified purpose. Free money is free money.

Because there is a big difference between paying for college and just giving your kid $200K and hoping they use it well. Same for buying them a new car at 23 vs just giving them $30K and hoping they use it for a car.

In our family, we help the kids out. But they have good jobs and are perfectly capable of paying for these things themselves. However, for ex, right now, there is not need for my kid to take a car loan of 7%+. Sure they could and they can put $10K down and buy a new car and manage the payment. But why pay so much in interest? Or we can simply gift them the $36K for the year and let them own the car outright. Of course we know they will continue to save what "would have been the car payment" rather than send it on partying/vacations. If they were not as financially savy we might not do it

I actually don't see much difference...money is money. If your kid is responsible and let's say really wants to apprentice as an electrician (for free)...why not give your kid the $200k you would have provided for college and in theory they will invest it wisely and come out way ahed. If you are giving them $30k for a car...maybe they decide they can actually do much better using the interest/dividends/cap gains on that $30k and uber/metro/public transport everywhere. It's not just the up-front, there is also gas, insurance and maintenance on the car.

Again, I don't think this is what OP meant by setting them up for success. I think they meant advice on where to start an investment account, best savings vehicles, etc.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:If you have the money gift them the max amount the IRS allows without having to declare the gift. Put it in a brokerage account and add to it every year. The limit is $18k for 2024. If they’re working you can max their Roth IRA with some of the gift money.

Sit down with them and show them a compound interest calculator. Show them how much money will be in that account when they’re 40, 50 and 60 if they let it compound.

Also if you can swing it fully fund college, help them with a down payment on their first home. For my recent college graduate I’m gifting him his rent for the rest of the year ($1000 a month) so he can get used to his paycheck and save for a small emergency fund.

OP perhaps asked a misleading question.

What you suggest above does in fact set your kids up for success...however, it doesn't set themselves up for creating their own success.

I mean, why stop at the above...why not pay for everything for your kid for the rest of their life?

It's funny how folks suggest giving their kids tons of money, but for some reason it always has to have some specified purpose. Free money is free money.

Because there is a big difference between paying for college and just giving your kid $200K and hoping they use it well. Same for buying them a new car at 23 vs just giving them $30K and hoping they use it for a car.

In our family, we help the kids out. But they have good jobs and are perfectly capable of paying for these things themselves. However, for ex, right now, there is not need for my kid to take a car loan of 7%+. Sure they could and they can put $10K down and buy a new car and manage the payment. But why pay so much in interest? Or we can simply gift them the $36K for the year and let them own the car outright. Of course we know they will continue to save what "would have been the car payment" rather than send it on partying/vacations. If they were not as financially savy we might not do it

I actually don't see much difference...money is money. If your kid is responsible and let's say really wants to apprentice as an electrician (for free)...why not give your kid the $200k you would have provided for college and in theory they will invest it wisely and come out way ahed. If you are giving them $30k for a car...maybe they decide they can actually do much better using the interest/dividends/cap gains on that $30k and uber/metro/public transport everywhere. It's not just the up-front, there is also gas, insurance and maintenance on the car.

Again, I don't think this is what OP meant by setting them up for success. I think they meant advice on where to start an investment account, best savings vehicles, etc.

I would happily do that if my kid wanted that path. And yes, if they wanted to live in a city and not need a car, we would likely still gift them the money. However we wouldn't if they were choosing to "waste the money". If my kid did not save anything (no ira, no 401K, no regular savings) and wanted me to give money for just "living life" then we might teach them "tough love". But the above was an example. Basically we want them to have a path in life and good financial plan. Otherwise, $200K in their hands could be lost and I'd rather not let them experment with our hard earned money.

I used the car example because our launched kid is in an area where car is essential. And we want to ensure they have a safe, reliable form of transportation. Just got them a new car (they selected and negotiated), and they are getting 35% of what we paid for their old car 12 years ago. Pretty good deal. Figure sell the old car while it still has some value and before costly things start happening with it. In the kid's mind, now they are set for 10 years with the new vehicle. So they have a plan. And more importantly could afford it themselves and are grateful for the gifts from us. They see their friends paying off student loans and struggling to save and driving really old clunkers. So they know how good they have it.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:If you have the money gift them the max amount the IRS allows without having to declare the gift. Put it in a brokerage account and add to it every year. The limit is $18k for 2024. If they’re working you can max their Roth IRA with some of the gift money.

Sit down with them and show them a compound interest calculator. Show them how much money will be in that account when they’re 40, 50 and 60 if they let it compound.

Also if you can swing it fully fund college, help them with a down payment on their first home. For my recent college graduate I’m gifting him his rent for the rest of the year ($1000 a month) so he can get used to his paycheck and save for a small emergency fund.

OP perhaps asked a misleading question.

What you suggest above does in fact set your kids up for success...however, it doesn't set themselves up for creating their own success.

I mean, why stop at the above...why not pay for everything for your kid for the rest of their life?

It's funny how folks suggest giving their kids tons of money, but for some reason it always has to have some specified purpose. Free money is free money.

Because there is a big difference between paying for college and just giving your kid $200K and hoping they use it well. Same for buying them a new car at 23 vs just giving them $30K and hoping they use it for a car.

In our family, we help the kids out. But they have good jobs and are perfectly capable of paying for these things themselves. However, for ex, right now, there is not need for my kid to take a car loan of 7%+. Sure they could and they can put $10K down and buy a new car and manage the payment. But why pay so much in interest? Or we can simply gift them the $36K for the year and let them own the car outright. Of course we know they will continue to save what "would have been the car payment" rather than send it on partying/vacations. If they were not as financially savy we might not do it

I actually don't see much difference...money is money. If your kid is responsible and let's say really wants to apprentice as an electrician (for free)...why not give your kid the $200k you would have provided for college and in theory they will invest it wisely and come out way ahed. If you are giving them $30k for a car...maybe they decide they can actually do much better using the interest/dividends/cap gains on that $30k and uber/metro/public transport everywhere. It's not just the up-front, there is also gas, insurance and maintenance on the car.

Again, I don't think this is what OP meant by setting them up for success. I think they meant advice on where to start an investment account, best savings vehicles, etc.

I would happily do that if my kid wanted that path. And yes, if they wanted to live in a city and not need a car, we would likely still gift them the money. However we wouldn't if they were choosing to "waste the money". If my kid did not save anything (no ira, no 401K, no regular savings) and wanted me to give money for just "living life" then we might teach them "tough love". But the above was an example. Basically we want them to have a path in life and good financial plan. Otherwise, $200K in their hands could be lost and I'd rather not let them experment with our hard earned money.

I used the car example because our launched kid is in an area where car is essential. And we want to ensure they have a safe, reliable form of transportation. Just got them a new car (they selected and negotiated), and they are getting 35% of what we paid for their old car 12 years ago. Pretty good deal. Figure sell the old car while it still has some value and before costly things start happening with it. In the kid's mind, now they are set for 10 years with the new vehicle. So they have a plan. And more importantly could afford it themselves and are grateful for the gifts from us. They see their friends paying off student loans and struggling to save and driving really old clunkers. So they know how good they have it.

I get it...but your advice on how to set your kid up for success is pretty simple...give them lots of $$$s if you have it and you don't think they will blow it.

That's what this all boils down to. Maybe OP is asking about strategies for giving their kid $$$s, but I think it's more "teaching them to fish".

[Anonymous]

We always spoke with them about the importance of getting a good education, working hard and saving money. We also set a good example by doing all of that ourselves. They never got allowances or college spending money though we would slip them money once in awhile. They are all very successful and financially responsible.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Just curious why you are going with Robinhood and not a more trusted company like Vanguard? Is the app more appealing? I know Vanguards interface is muy blah.

Grandpa is on line.

Chine, Robinhood, Revolut is where the kids invest.
Vanguard is the over 80 crowd.
Schwab and Fidelity over 50 crowd

Yep

Our best and brightest investors are using Robinhood and tick Tok.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Just curious why you are going with Robinhood and not a more trusted company like Vanguard? Is the app more appealing? I know Vanguards interface is muy blah.

Grandpa is on line.

Chine, Robinhood, Revolut is where the kids invest.
Vanguard is the over 80 crowd.
Schwab and Fidelity over 50 crowd

I'm 36 and have millions in vanguard.

Revolut has 7 year olds with accounts. Someone born 2017 you are as old as dirt.

I am older than you but GenZ Is now old. My 17 year old is considered old. In fact some rich kid called her an old lady last week. He was 6. To him she is.

The fact is you are dying soon. So am I. Anyone over 18 is old

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Just curious why you are going with Robinhood and not a more trusted company like Vanguard? Is the app more appealing? I know Vanguards interface is muy blah.

Grandpa is on line.

Chine, Robinhood, Revolut is where the kids invest.
Vanguard is the over 80 crowd.
Schwab and Fidelity over 50 crowd

I'm 36 and have millions in vanguard.

Revolut has 7 year olds with accounts. Someone born 2017 you are as old as dirt.

I am older than you but GenZ Is now old. My 17 year old is considered old. In fact some rich kid called her an old lady last week. He was 6. To him she is.

The fact is you are dying soon. So am I. Anyone over 18 is old

Cool. I was responding to the person who says people who use vanguard are over 80. Obviously that's not true.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Just curious why you are going with Robinhood and not a more trusted company like Vanguard? Is the app more appealing? I know Vanguards interface is muy blah.

Grandpa is on line.

Chine, Robinhood, Revolut is where the kids invest.
Vanguard is the over 80 crowd.
Schwab and Fidelity over 50 crowd

I'm 36 and have millions in vanguard.

Revolut has 7 year olds with accounts. Someone born 2017 you are as old as dirt.

I am older than you but GenZ Is now old. My 17 year old is considered old. In fact some rich kid called her an old lady last week. He was 6. To him she is.

The fact is you are dying soon. So am I. Anyone over 18 is old

I'm not sure why anyone should be impressed with a brokerage giving accounts to 7 year olds. You do understand that they're too young to enter into contracts, right?

Revolut doesn't even do their own clearing in the US and maybe just broke one million customers in the US.