I am 38 yr. old F. I have a 4 yr. old son. Would like to start investing something for his future. Stocks?

Question

Stocks? Bonds? Cd's? I want him to get his education or at least have something to fall back on. I am tempted with the stock market but how do you buy them? How much are they? How about any other ways to invest for him?

Answer 1

If you pick something with long term potential it is a fabulous idea. A Roth IRA immediately comes to mind.
Simplest would be a full featuered no load mutual fund with a good record. Right there I would recommend you put PAXWORLD funds in a search engine and go from there.
Many, many ways exist, and it will require energy to assess the best ones. Many of my previous answers are here, but for information sharing I will suggest a yahoo group listed below where you can get some info specific to your situation

Answer 2

It is terrific that you have made this decision. I would stay mainly in a money market fund with initial deposits and buy into the stock market only on big selloffs (10% minimum in Dow 30 ) if you want a stock market exposure in the portfolio. I would maintain an exposure to natural resources either through a stock fund like the ETF iShares Goldman Sachs Natural Resources (IGE) or commodity fund like Pimco Commodity Real Return (PCRDX). No one can predict the future but we can be certain there will be volatility and likely some scary selloffs in stocks and commodities over the next 14 years or so before your son enters college. The likely course over the next 14 years I believe is for much more inflation because of the tremendous amount of debt our government incurs each minute of every day. The inflation stats the government gives us are total garbage as their index is so completely flawed to give the result they want us to see. Stocks may also rise a great deal in the next 14 years and the nominal increase in value may keep up with inflation. Personally, I am overweighted in inflation hedges like natural resources and gold and silver stocks because I feel the future is going to be more of the same in terms of government printing more and more dollars as long as they can get away with it (which could be a very long time, or may not be).

Answer 3

NEVER invest in single stocks. It is no different than gambling in Vegas. Mutual funds have averaged 10% return over the last 70 years.

As for the guy above, like i said, stocks are just like putting your money on black and letting it roll. Mutual funds are diversified, so your investing in the whole board, not just one company. I bet he was pushing high tech stocks back in the '90s. Look where that would have gotten you. Look for mutual funds that have at least a 5 year track record (15 is better). 401k's are inversted in mutual funds. Some of the ones that my company's 401k offer have been around since the 1930's, and averaged over 10% (including the Depression).

I have a co-worker whose parents left him over $1 million in stocks when they died. They are now worth $400,000. That's a great return. Ever heard of Enron or WorldCom?

Bonds and CD's (certificates of depreciation) give lousy returns. The rate of inflation averages between 2 and 4%. So a 5% cd might gain you a 1 to 3% return, when factoring in inflation. Lousy.

Never buy cash value life insurance. You pay 10 times the premuium of regular life insurance for the priveledge of borrowing against it or pulling a fraction of your money back out. Total ripoff.

Get either an ESA (education savings account), or mutual funds. IRA's can only be cashed out when you retire, otherwise the government taxes you up to 40%.

I think that you can do $2000 / yr in the ESA.

Answer 4

Start with a Coverdell Education Savings account for him.

I use Scottrade because I like their low fees for stock limit trades. But you never know what the future holds, you can lose money in the market also.

http://www.scottrade.com

You can put $2000 a year into a Coverdell for your son. The gains are tax free when used for education.

I would put it in mutual funds, but you really have to know what you are doing. I have had good luck with No-Load, No Transaction fee funds like UMREX (Real Estate) and UMESX (Energy).

You can also buy up to $30,000 per year in United States Savings Bonds for your son at the us treasury dept web site. EE or I Series bonds. You can often get them from work also, depends on your work.

http://www.treasurydirect.gov

Stay away from currency trading, it is extremely risky. They use 100 to 1 leverage, so if the value of your currency investment drops by only 1%, you lose it all.

Answer 5

Giving your time your looking at, which is 14 to 15 years, you have plenty of time for your money grow . I suggest you stay away from those crappy mutual funds that everyone hypes on this board. You will only find that you will be upset at your return on your money.

As far as bonds, I have saving bonds but the only reason I have them is I have extra money every payday and I buy one bond through pay roll deduction.

529 plan: http://www.forefieldkt.com/KT/trns.aspx?xd=ED-AT-TB06-A01&il=ai&xsl=tool

As far as stock, I suggest looking into http://www.sharebuilder.com/, this allows you to invest weekly or monthly. Its easy to get started and does not require any start up money and you can start investing anytime your ready. You pick the stock, not some crappy fund manager. I've been with them for about 7 years and recommend this to everyone.
As far as stocks, most of my stocks pay a nice little dividend, so every quarter I get a nice sum of money deposited into my account. This is something that you wont see with a mutual fund.

Answer 6

There is plenty of advise out there on your question. You must decide what amount of risk you feel comfortable with. If you don't have the time to do the research into making a choice. Go see a professional in your area, that doesn't charge you to sit down with them. Ask them questions. How much does it cost, expense ratios or commission's. What type of performance has the investment done. Ask question about the adviser. Years in business? Go to a reputable company that you recognize. Asks your friends who they use.

Answer 7

I applaud your intent. But I have to say be very careful with investing! We lost a home and many, many dollars b/c of the market. I don't care for investing in the market b/c of the risk.

I decided to buy LAND!! I learned it takes time to liquidate and it's value only slowly goes up - but it IS steadily on the rise AND it can be used as collateral. You got a few years before the little guy will be thinking pre-Med. LOL! Just an opinion.

Answer 8

I agree with the person who said 529 Plans. They have tax advantages and they're flexible. The best thing you can do for your son is to invest in an education for him

Answer 9

I would not invest in the stock market. US Treasure Bonds are the best and safest in the long run.

Answer 10

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