How to Invest for Your Grandkids
Have you reached that pinnacle of life yet? Do you know the one where you’re a grandparent? Having grandkids is an amazing experience and opportunity. But with all of the fun, comes more responsibility. Now you have even more people to worry about. In fact, for some grandparents, taking caring of their grandkids have become the norm. Even if you don’t currently care for your grandkids, most grandparents want to make sure their grandkids are taken care of after they’regone. Therefore, investing in a family has become very important.
There are several ways to do this. But what are the best ways to start saving and/or investing for your grandkids so their future is as bright as you want it to be? To answer that question, you first need to look at why you’re investing. In other words, what is the money going to be used for? The other big question you need to answer is how old are your grandkids when you start saving/investing.
Saving for a College Education
Many grandparents want to save for their grandchildren’s college education. One of the best ways to do this is by opening the UPA 529 savings plan. There are numerous investment funds where you can contribute your money and your investment will grow without taxes until you withdraw it. Then, if you use the money for qualified education expenses, your profits will be 100 percent tax-free. And one more feature is that many states offer a tax break for 529 contributions.
Choose Your Investment Funds Wisely
If you choose to contribute to a 529 you also need to make sure you invest in the right kind of investment fund. If you’re saving for very young grandchildren then stock-based funds are a good idea. On the other hand, if your grandchildren are already close to starting
Brokerage Account Is Another Option
If you want to invest in your grandchildren’s future but not necessarily to a college fund, you could open a brokerage account, which is known as UTMA or UGMA accounts. These give you control of the account until your grandchild reaches a specified age, which is usually 18 or 21.
These types of accounts also come with numerous investment fund options. But generally, stocks and stock-based funds are a good bet because your grandchildren have a long period of growth time in front of them. By using a stock-based fund made up of several companies your grandchildren will get the benefit of the stockmarket’sappreciation over the long-term without the risk of having to rely on a single company’s success.
Plan Ahead
Plan AheadThe bottom line when planning for your grandkids futureis you need to start saving. Whether you choose a 529 savings plan, a UTMA, or any other type of investment opportunity, the key is getting started. The earlier you begin, the more time you’ll have to see your investment grow. And your grandkids will thank you.
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