If you are just somewhat aggressive you can do a lot better than 6% annual over the long term, and with what you are talking about, time is on the kid's side.
Just remember the "rule of 72".
Take 72 and divide it by your rate of return; that is how many years it takes for you investment to double.
For example:
72 divided by 6(6%) equal 12 (12 years), 72 divided by 10(10%) equals 7.2 (7.2 years), etc., etc..

We have used the 529 plans for all three, but two have no tax breaks as we felt there were more options for growth there. Several years later with our youngest there were more options so we have one that is state tax free.
Atrapper, I too find this investing thing new to me. I moved away from home at 14 to work so my mom could manage and work with the 4 younger siblings. Worked all through HS, College then militry and finally in the world of vull time civilian work. Never inherited a cent and had to learn all this investing, saving , money management as I worked. No one in my background had any monies to manage so I had to learn all of that and have mostly taken a conservative approach that matches my lifestyle as well. I feel really grateful that we can really help our kids and grand kids because a generation or two back there was none of that for us.
I am by admission not the smartest investor but one thing I do is manage the 90% or 95% that I spend each year so I can keep my cost of living lower as that to me is as important or more so than trying to find the best funds to move in and out of etc.

Bryce

I started a 529 plan for my son when he was born and put in $50 a paycheck. He had $35k for college when he graduated. I also started a Roth IRA for him when he was about 10 and he is now putting his own money into it for his retirement fund. I retired at 55 so he knows it can be done if he continues to save!

So they don't blow it all at once, u can set trust up for 1/3 at age 25, 1/2 at age 30, and remainder at age 35. That way if they make a bad move early, they have time to recover.

ours stays in our control until we died, the parents know nothing of these accounts. if the child goes way were, then chances are they probably will never know about them, we want them to learn about life have some struggles, we believe that they will appreciate it more , just my opinion

Can one of you guys share a Program or Broker name that can/will take that 2000 and handle it for the newborn until they are adults??

I have a grand Niece on the way in April and this sounds like something that I could get done for the little tike. I would rather do a lump sum of about 2k upon her birth and not have to do any maintenance or Required additional payments.

Perhaps call TDA and set up a custodial account. That's what we did. We put it in one fund that tracks with the S&P 500 (SPYG) but you can talk to them about various funds of that nature.

We still have 529s for both kids but stopped contributing to them as the portfolios of investments were very limited. We opened two brokerage accounts and those have performed better. With a brokerage account you have the entire stock market to choose from.

Example is I could invest in Tesla, Apple and Microsoft in a brokerage account. The world of stocks is your choice.

In a 529, I get a bucket of choices and those are my only choices. I cannot invest in the above stocks. The tax difference is negligible when you consider the scope of possible gains.

The key is getting a smart investor who will treat your investments as his own and follow your risk tolerance. That is the hardest thing to find.

This is something I would strongly recommend you NEVER do. What you are talking about is called discretionary trading authority. A broker must have written permission from you to make any trades either buy or sell, and also the approval of the brokerage firm. Many people had given these permissions prior to the crash of 1987. There were lots of law suits and disciplinary actions against brokers who made lousy and unauthorized trades during that time.

If you were to pursue granting this authority you should first investigate the person to whom you are giving permissions. See how long they've been doing this and check their licenses. Be sure to check for disciplinary actions against them. FINRA maintains a data base of all this information

If what you want is active professional management of an account for a child I would suggest an index mutual fund . That will give you professional management, oversight, and diversification at the outset. Any of the large mutual fund families can provide that for you. All trading within the fund will be done by professional managers. The account paperwork will address and explain that trading authority.

Just tell them what you want to do and they can guide you into the correct LEGAL vehicle. It may be an UGMA or UTMA or just a joint account with you and the minor as account owners.............also as Mark says a custodial account with a broker like TDA will work also.

Please do not give discretionary trading authority to any individual that you do not personally know well.............other than as described above in the case of a mutual fund

Recalled reading this thread years ago and thought it was worthy to bring to the top.

Ol' dad

Just hope they don't get divorced.

$10,000 at birth for 60 years @6% approx. $330,000. $10,000 at birth and add $1000/year @6% for 60 years approx.$7,000,000.

529 are too limiting. Not good choices. White has the right idea.

No. That would be about $863,000 before taxes, fees, etc.
If you add $10.000 at the end of each year you end up at about $5,660,000

My wife has been using Edward Jones for years and they have done well. I've seen some 14% return on fairly aggressive funds.

It depends. A 529c allows you to contribute more and at an earlier age. You connot start a Roth for a kid until they make an income, at which point the maximum annual contribution is the lesser of $7k or the amount they earned for the year.

You can also rollover a portion of any unused funds from the 529c into a Roth as long as the beneficiary is the same.

Ol dad

Personally I am pleased with 529 returns and options (A lot of the options in my sons plan give you exposure of the big name stocks just as with most mutual funds). They keep sweetening the pot with options for using the 529 including trade schools, approved education related expenses, allowing unused funds to be carried on to future beneficiaries, ability to roll an unused portion into a ROTH. With that being said I invested heavy in my sons 529 up to this year age 8 and he is sitting at around $50K which should easily be over $100K when it comes time to use it. (over the 8 years it has average 9 ish percent) I was really on the fence about saving for his education as I used some savings bonds my parents had put back for me for the first year and a half of college then I worked full time and went to school to finish up, I feel the working full time along with college was beneficial in my later success. I am also a big fan of the ROTH and wish that I would have balanced ROTH vs 401K contributions over the years as I opened a ROTH later in my career just as another avenue to save for retirement to supplement my 401K if needed. At the time i was not educated on the RMD's of a 401K which will now take some planning on my part and a whole other topic/thread.

IMO, Best investment for youngsters is a dog.

2nd best is 1/2 doz #0 or #1 long springs depending on age. JMO.

Buy them a chunk of land, limited amount and can't make more

I taught too many kids in college and could tell you the ones who were getting their tuition paid by how they were as students. At 18 - adult children should decide for themself if they want to go to college. If they do - they should figure out a way to pay for it.