I have a few hundred dollars that I would like to invest for my grandson. I have been told that since he?

Question

doesn't have a job ( he's only a yr old ) I can't buy an IRA. I have heard stories that if you invested $ 1000.00 when you are young you would have several thousand when you're ready to retire..what do I invest it in...other options other than a 529 for college??? any advice appreciated...Thanks

Answer 1

forget the college. money will be available for him come college time. as far as other investments, why not put something in trust for him.

Answer 2

The answer is a Coverdell Education Savings Account. The current max contribution is $2,000/year/child under 18. Funds from the account can be used to pay for educational related expenses. That includes grade school, high school or college tuition, books, supplies and dorm room & board costs. If you can only contribute $1,000 someone else can contribute the additional $1,000 up to the $2,000 yearly limit. Also if you open the account, you control it. So if your grandson goes to trade school and not college, you can change the benificary to another grandchild or someone else with educational expences.

Someone like myself can help you with investment choices to maximise the return on your investment. For example $2,000 invested each year for 18 years, at 10% rate of return would total $112,500 for college!

Answer 3

For a traditional IRA, you do need to have had taxable income but there must be an account right for him. Maybe a Roth? Check out the IRS.gov site and see what they say in their retirement accounts section. Also, contact an investment firm like Charles Schwab or T. Rowe Price or the investment department at your bank and ask for their advice. I believe you also receive some kind of tax credit for giving him a donation. If you have an accountant, check with him. He might have some suggestions about plan types too.

Here are some sites that might help:
http://www.irs.gov/retirement/index.html

http://www.bankrate.com/brm/news/DrDon/20070406_invest_children_education_a1.asp

http://www.newamerica.net/events/2006/childrens_savings_accounts

http://www.hrblock.com/investments/productservices/learn_edu.html

http://banking.about.com/od/investments/a/ira.htm

Answer 4

That's correct, he can't have an IRA if he doesn't have earned income. You could invest it in a mutual fund for him though - might need to go under Uniform Gift to Minors status.

Answer 5

Capital One has a 5% APY Money Market. You don't have enough for anything else, and that's the highest rate you can find for savings and no minimum balance - the hitch is that you have to sign up online to get that rate.

Answer 6

Open a brokerage account at Zecco and each week buy at least one share in the ETF IOO (It includes the 100 largest companies in the World)