Another investment thread: grandkids!

KTMan

Twelve Pointer
Contributor
Does anyone invest for their grandchildren? My wife and I did not have any accounts for our children. They kept us too broke to have any extra to invest for them (other than college).

I decided on our first grand child I was going to start a fund for every grandchild. It will be available for them at 21 years of age.

I started with an x amount and have set up to automatically invest x amount per month. I decided to do this in place of toys and junk they don't need.

Any pros or cons to setting up a fund for them?
 

Homebrewale

Old Mossy Horns
Absolutely not but that's because I don't have any grandchildren.

You can save two ways for the grandchildren. One way would be through UTMA accounts. The money that you put into the accounts belong to the grandkid. You can retain control as custodian to age 21. At age 21, they now control the account and use as they please.

Second way is you can open 529 plans for them. The money inside them grow tax-free if used correctly when withdrawn. These plans are not limited to college expenses. They can also be used for trade schools. If the grand kid decides not to attend college or trade school, you can roll up to $35,000 into a Roth IRA for yourself.

https://www.cfnc.org/news/can-a-529-plan-be-used-for-trade-school/
 

KTMan

Twelve Pointer
Contributor
Absolutely not but that's because I don't have any grandchildren.

You can save two ways for the grandchildren. One way would be through UTMA accounts. The money that you put into the accounts belong to the grandkid. You can retain control as custodian to age 21. At age 21, they now control the account and use as they please.

Second way is you can open 529 plans for them. The money inside them grow tax-free if used correctly when withdrawn. These plans are not limited to college expenses. They can also be used for trade schools. If the grand kid decides not to attend college or trade school, you can roll up to $35,000 into a Roth IRA for yourself.

https://www.cfnc.org/news/can-a-529-plan-be-used-for-trade-school/
UTMA is what I've set up.
 

Bailey Boat

Old Mossy Horns
LJ and I don't have kids, so no Grands. But IF I did they can earn their own just like I did, THE HARD WAY.......

I feel one of the HUGE problems today is the "gifted" generation, they haven't WORKED for a damned thing and have no intentions of ever doing so. They will stand there with their hand out waiting for someone to come by and put something into it. I know that my Orphanage background may color my attitude but if I can do great in life with no assistance so can they..... or not.....
 

DBCooper

Old Mossy Horns
Contributor
I don't have grandkids now, but sure hope I do in the somewhat near future.

Question (because I've pondered this).......

Why not just accumulate wealth, yourself, and designate them in your will? In this instance, you'd still have access to it in case of emergency.
 

Firedog

Old Mossy Horns
Contributor
I don't have grand kids yet. No plans to save for them. I saved for my kids college education, and both have left/will leave school debt free. I saw that as my responsibility as a parent IF I could afford it, and thankfully I could.

I also have no intention of playing the grandkid game in my will. Lets say my daughter has one and I designate X amount in the will, I die before my son as one or my daughter another.. how is that right for the ones I never had a chance to meet? My kids will be named and I hope I have instilled enough knowledge on them to use that inheritance wisely to help them provide a good foundation for themselves and their kids.
 

DBCooper

Old Mossy Horns
Contributor
I don't have grand kids yet. No plans to save for them. I saved for my kids college education, and both have left/will leave school debt free. I saw that as my responsibility as a parent IF I could afford it, and thankfully I could.

I also have no intention of playing the grandkid game in my will. Lets say my daughter has one and I designate X amount in the will, I die before my son as one or my daughter another.. how is that right for the ones I never had a chance to meet? My kids will be named and I hope I have instilled enough knowledge on them to use that inheritance wisely to help them provide a good foundation for themselves and their kids.
That's introducing a new twist (never meeting them). I couldn't love or trust my son (and God knows we love his girlfriend, too) more. My son will inherit our home. It's the ancillaries that will likely be designated for our KNOWN grandchildren. Hope to be in a position to gift them $$ throughout their lives.....or, as long as we're here.
 

bte0816

Eight Pointer
LJ and I don't have kids, so no Grands. But IF I did they can earn their own just like I did, THE HARD WAY.......

I feel one of the HUGE problems today is the "gifted" generation, they haven't WORKED for a damned thing and have no intentions of ever doing so. They will stand there with their hand out waiting for someone to come by and put something into it. I know that my Orphanage background may color my attitude but if I can do great in life with no assistance so can they..... or not.....

I know some really brilliant people that never got a chance at life because their parents kicked them on their ass as soon as they graduated/turned 18. Hard to get ahead when you only have a HS diploma and have to immediately start covering all of your rent/food. Can't really go to school or learn a trade when you have to work 40-50+hrs a week for $8 hr just to live in a box and have a little food to eat. Also, not a wonder a lot of people in that situation turn to drugs, I would probably want an escape from that life too.

I'm sure a few will reply "I pulled myself up by the bootstraps/they could have joined the military like I did" but that's mostly the exception to the circumstances I'm discussing.
 
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buckshooter

Old Mossy Horns
Does anyone invest for their grandchildren? My wife and I did not have any accounts for our children. They kept us too broke to have any extra to invest for them (other than college).

I decided on our first grand child I was going to start a fund for every grandchild. It will be available for them at 21 years of age.

I started with an x amount and have set up to automatically invest x amount per month. I decided to do this in place of toys and junk they don't need.

Any pros or cons to setting up a fund for them?

Absolutely we did. At their birth. Like you they’ll be eligible to begin using it at 21.


I hope we’re both around to see that day for both Sophia and Dakota.
 

ctsnow

Eight Pointer
It's good to know some people realize they aren't cut out to have kids.

I know some really brilliant people that never got a chance at life because their parents kicked them on their ass as soon as they graduated/turned 18. Hard to get ahead when you only have a HS diploma and have to immediately start covering all of your rent/food. Can't really go to school or learn a trade when you have to work 40-50+hrs a week for $8 hr just to live in a box and have a little food to eat. Also, not a wonder a lot of people in that situation turn to drugs, I would probably want an escape from that life too.

I'm sure a few will reply "I pulled myself up by the bootstraps/they could have joined the military like I did" but that's mostly the exception to the circumstances I'm discussing.
It came be done. My wife and I are 31 and we did it. We both have college degrees with well paying jobs, own a large farm, and have a really nice house. Our parents didn’t pay for anything. I’ve had a job since I was 14 and worked 30+ hours a week while getting a biology degree. Insurance, gas, cell phone bill, etc I have paid since I started working. It wasn’t fun, but now that we have our home and land, everything is pretty simple. The land and home will be paid off by the time we are 40ish and then will put all that money into savings and retire young, Lord willing. It’s all a matter if you let your situation determine your outcome.
 

DBCooper

Old Mossy Horns
Contributor
It's good to know some people realize they aren't cut out to have kids.

I know some really brilliant people that never got a chance at life because their parents kicked them on their ass as soon as they graduated/turned 18. Hard to get ahead when you only have a HS diploma and have to immediately start covering all of your rent/food. Can't really go to school or learn a trade when you have to work 40-50+hrs a week for $8 hr just to live in a box and have a little food to eat. Also, not a wonder a lot of people in that situation turn to drugs, I would probably want an escape from that life too.

I'm sure a few will reply "I pulled myself up by the bootstraps/they could have joined the military like I did" but that's mostly the exception to the circumstances I'm discussing.
Love this ^

All situations are different. Our son moved out at 19 and with the exception of having to help him get out from under a pickup he was upside down in (ONCE), he's never asked us for a dime. I'll leave this world with NO reservations of leaving him something to make his and his kids' lives easier.
 

bte0816

Eight Pointer
It came be done. My wife and I are 31 and we did it. We both have college degrees with well paying jobs, own a large farm, and have a really nice house. Our parents didn’t pay for anything. I’ve had a job since I was 14 and worked 30+ hours a week while getting a biology degree. Insurance, gas, cell phone bill, etc I have paid since I started working. It wasn’t fun, but now that we have our home and land, everything is pretty simple. The land and home will be paid off by the time we are 40ish and then will put all that money into savings and retire young, Lord willing. It’s all a matter if you let your situation determine your outcome.
I never said it can't be done. Don't wait till you are 40ish to start investing. Time in the market is most people's investing regret. They all wish they had started sooner.
 

v8stang289

Twelve Pointer
It came be done. My wife and I are 31 and we did it. We both have college degrees with well paying jobs, own a large farm, and have a really nice house. Our parents didn’t pay for anything. I’ve had a job since I was 14 and worked 30+ hours a week while getting a biology degree. Insurance, gas, cell phone bill, etc I have paid since I started working. It wasn’t fun, but now that we have our home and land, everything is pretty simple. The land and home will be paid off by the time we are 40ish and then will put all that money into savings and retire young, Lord willing. It’s all a matter if you let your situation determine your outcome.
Just out of curiosity, were you and your wife both put out on your own at 18?

I absolutely believe in teaching your children work ethic, self reliance, financial literacy, and letting them learn on their own(sometimes the hard way)
But I honestly don't get the "once you're 18 you're no longer my problem" mentality.
I'm not going to babysit them and bail them out of every situation while they mooch off of me all their lives, but I'm not going to throw them out at 18.
The majority of people I've met in those situations have been less than successful, and as mentioned above, often turn to drugs or other destructive behaviors.
Deciding to move out on their own at that age tends to be different (if they've worked, saved prepared)
Just my observations in my limited experiences.
Just genuinely curious and trying to understand the different points of view.

To the OP, I don't have grandchildren yet. I would imagine if that day comes I will likely set up some sort of savings account to contribute to for them.
 

georgeeebuck

Twelve Pointer
Do we love our grandkids? ( Yep ) . Have we helped with educational costs ? ( Sure have) . Would we help with seed money on a well thought out business plan , down payment on a home or more education to improve their quality of life ? (sure ) . Would we turn over a sizable amount of money to them for them to do as they pleased when they turned 21 ? ( Oh Hell NO !! )
 

QuietButDeadly

Old Mossy Horns
Contributor
The grandkids are the kids responsibility just as my kids were my responsibility. My will leaves anything I have left to my kids. If they want to give it to their kids, that is up to them. I am not skipping a generation to grandkids or great grandkids.

I have seen families torn to pieces by generation skipping that created plenty of hard feelings.
 

ctsnow

Eight Pointer
Just out of curiosity, were you and your wife both put out on your own at 18?

I absolutely believe in teaching your children work ethic, self reliance, financial literacy, and letting them learn on their own(sometimes the hard way)
But I honestly don't get the "once you're 18 you're no longer my problem" mentality.
I'm not going to babysit them and bail them out of every situation while they mooch off of me all their lives, but I'm not going to throw them out at 18.
The majority of people I've met in those situations have been less than successful, and as mentioned above, often turn to drugs or other destructive behaviors.
Deciding to move out on their own at that age tends to be different (if they've worked, saved prepared)
Just my observations in my limited experiences.
Just genuinely curious and trying to understand the different points of view.

To the OP, I don't have grandchildren yet. I would imagine if that day comes I will likely set up some sort of savings account to contribute to for them.
Her parents didn’t have the resources to help with anything. We got married when I was 18 and she had just turned 19, so my parents said if you think you are old enough to get married you can pay for all of your school.
 

v8stang289

Twelve Pointer
Her parents didn’t have the resources to help with anything. We got married when I was 18 and she had just turned 19, so my parents said if you think you are old enough to get married you can pay for all of your school.
Gotcha I understand.
Basically I was just wondering if it was a "you're 18, you're on your own"
Or you guys decided to step out on your own, or what the situation was.
Thanks for answering.
 
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JayR

Four Pointer
I don't have grandkids now, but sure hope I do in the somewhat near future.

Question (because I've pondered this).......

Why not just accumulate wealth, yourself, and designate them in your will? In this instance, you'd still have access to it in case of emergency.
The 529 is a tax advantaged account (growth is not taxed). I don't recall if the custodial account has any similar advantages.
 
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woodmoose

Administrator
Staff member
Contributor
I'm sure a few will reply "I pulled myself up by the bootstraps/they could have joined the military like I did" but that's mostly the exception to the circumstances I'm discussing.

Count me as one of the “few”,,,,if that happens as it was my life

Now my children, I told them when they were young that I would pay for their college education - that I did - beyond that just depends on how much I don’t spend
 

JayR

Four Pointer
Does anyone invest for their grandchildren? My wife and I did not have any accounts for our children. They kept us too broke to have any extra to invest for them (other than college).

I decided on our first grand child I was going to start a fund for every grandchild. It will be available for them at 21 years of age.

I started with an x amount and have set up to automatically invest x amount per month. I decided to do this in place of toys and junk they don't need.

Any pros or cons to setting up a fund for them?
The 529 has some protections on how the money is used (eligible expenses, etc), and can be transferred to immediate family members if there is a different need in the future, so there are few downsides.

For the UTMA custodial account, the downside is that the money is automatically transferred to the kid once they come of age. So, even if they turn out to be a punk (little s-word would be more accurate), or a freeloader like Bailey Boat is concerned about, they would likely squander the gift (or you may not want to give it to them at all).

You can get around this by having the money be transferred to a trust in their name, with certain conditions met to receive the funds (e.g. finished college, or trade school, or some other career path milestone). For that you'd need an attorney, or at least need to consult with one.

We have both accounts for my son, and we'll be setting up a trust to the custodial account for the above reasons.
 

JayR

Four Pointer
I know some really brilliant people that never got a chance at life because their parents kicked them on their ass as soon as they graduated/turned 18. Hard to get ahead when you only have a HS diploma and have to immediately start covering all of your rent/food. Can't really go to school or learn a trade when you have to work 40-50+hrs a week for $8 hr just to live in a box and have a little food to eat. Also, not a wonder a lot of people in that situation turn to drugs, I would probably want an escape from that life too.

I'm sure a few will reply "I pulled myself up by the bootstraps/they could have joined the military like I did" but that's mostly the exception to the circumstances I'm discussing.
The real irony is that the kids whose parents have the means to invest like this are automatically way ahead of the kids in your scenario. So those that get these accounts are the ones who need them the least, essentially. Of course, there is a wide range in the middle of families who get by alright.
 

bte0816

Eight Pointer
The real irony is that the kids whose parents have the means to invest like this are automatically way ahead of the kids in your scenario. So those that get these accounts are the ones who need them the least, essentially. Of course, there is a wide range in the middle of families who get by alright.
Right, but why would I hold my kids back if I have the means to help them?
 

bte0816

Eight Pointer
Count me as one of the “few”,,,,if that happens as it was my life

Now my children, I told them when they were young that I would pay for their college education - that I did - beyond that just depends on how much I don’t spend
I'm glad it worked out for you. So many either can't get out of their own way because of the chip on their shoulder because someone else may have had "daddy's money" or are so insufferable to be around nobody wants to be near them
 

DBCooper

Old Mossy Horns
Contributor
The 529 is a tax advantaged account (growth is bot taxed). I don't recall if the custodial account has any similar advantages.
I can gift $15K/yr with no tax liability for them, and I'm pretty sure anything left to them in my will is not taxable.

I could be wrong. It's not been an issue....and won't be for a while.
 

ctsnow

Eight Pointer
Gotcha I understand.
Basically I was just wondering if it was a "you're 18, you're on your own"
Or you guys decided to step out on your own, or what the situation was.
Thanks for answering.
Honestly, we knew we wanted to get married and were going to wait until school was over, but with FAFSA for school it saved us money by getting married sooner.
 

bte0816

Eight Pointer
I can gift $15K/yr with no tax liability for them, and I'm pretty sure anything left to them in my will is not taxable.

I could be wrong. It's not been an issue....and won't be for a while.
I believe anything in excess of the 15K/yr limit just has to be reported annually to the IRS and it would only have tax liability if it was in total in excess of the 11.7 million lifetime limit currently allowed.

I don't have to worry about that lifetime limit at any point in the near future :ROFLMAO:.
 
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