If you go with a taxible account (which we did for our kids), you need to look into taxible gains harvesting & the "kiddie tax".

The kiddie tax is a special rule to keep parents from hiding their investment income in their kid's name. The rules in 2025 are: a kid can make 1,350 per year tax free investment income. The next 1,350 is taxed at the kid's rate. Anything over that is taxed at the parents highest marginal rate.

Mostly you'll hear about tax LOSS harvesting where when a stock investment goes down, the person sells it and rebuys something similar so they can claim the loss on their taxes. There's "wash sale" rules that say if you rebuy a "substantially identical" assent within 30 days, you don't get to the claim the loss. There is no wash sale rule on taxible GAINS, so you're free to rebuy the same asset immediately and still claim the taxible gain. They don't prohibit it, because under virtually all circumstances, it makes no sense to do it.

But it makes sense for a minor to harvest taxible gains. Every few years when their unrealized gains approach the kiddie tax thresholds (1,350 in 2025, it goes up occasinoally), sell the investments and rebuy. File taxes for the kid, acknowledging the income, but it will be low enough they owe no tax. What you're doing is raising their cost basis so they never have to pay tax on that gain.

We invested for the kids (now 21) when they were born, in custodial accounts. I practiced tax gain harvesting until they were old enough to have jobs and income. One of them decided to move it all to Roth now that he has earned income and is eligible to make ROTH contributions. He paid nearly 0 tax on gains of 12-14 thousand $ when we sold to fund his ROTH. His sister still has her's in a taxible investment account, but her unrealized gains are fairly low so she wouldn't owne much tax if she sold it today.