Ben and I have a meeting this morning with our financial planner (and good friend). We are planning to open up a retirement account for young Bennie who just turned 18 in April. It’s something I wish I had done when I was his age, but of course we are typically live-for-the-moment at such a stage in life. So to buck that trend, we’re going to set up a plan.
Most likely it will be a Roth IRA with allowances for Ben to throw in small amounts of money on a regular basis. We’ve got some choices on plans with a minimum initial investment, something like $250 or so, which Ben has set aside. I’ll do the same for Brad when he turns 18 in 2½ years.
Just curious what you all think. Did anyone start a retirement account at an early age? Any good guidance from the field? I think it will be a great lesson for Ben on seeing the big picture, being future-minded, and being prepared. And hopefully by the time he reaches retirement, the fund or funds will have made the early investment worth it.
You always hear these crazy stories about how if you were to start a retirement account at a young age and just throw a little bit in each year you will have a million by the time you reach a certain age. Sounds like a very good idea.
Bruce, we haven’t set up retirement accounts as such, but when each of our boys were born, we put $500 in higher risk money market accounts through the fraternal organization Thrivent (a Lutheran insurance/investment group). The most they have grown in one year is 46%. The most they have lost is 19% (2007). Our 12 year old’s initial $500 is now well over $5,000.
Because he is still teaching that one a lesson about taxes by taking half the money he earns. Then he will know that before today, all his labor this year was for the benefit of the State, and today he finally gets to keep the fruits of his labor, but maybe Bruce will ground him for the next couple months, making him fill out useless paperwork, to show him a lesson about regulations.
Gotta be 18 to make his own investment. I found that out when I tried a couple years ago. I wish it wasn’t so but 'dems da rules. The boys do each have their own savings accounts locally and through ING.
I looked at this for awhile but am still not sure I’m following what you’re saying here. I know about cost of goverment day but I’m having trouble seeing why that would apply to Ben investing in and for his future. Help me see the light here, Kev.
Don’t know what a Roth IRA is, but sounds like some sort of savings plan/fund rather than investment. Correct me if I’m wrong.
As for financial advisers…I avoid them like the plague.
Investment as an art form to me means actually being proactive and figuring out for yourself what is worth putting your money into. It is not about sticking your money into some savings plan for someone else to manage.
I incorporated a company for this purpose just over 2yrs ago. It is essentially an investment holding company. Currently it has a rental property, some shares, and some cash in various currencies, and a few odds and ends.
It’s more tax efficient (in NZ) to have a company own your investments…and alot more fun. As far as money goes, it’s just numbers to me though. Kind of like playing monopoly…but in real life.
Yep, that’s kinda useful. There is a lot to figure out. It took me 2yrs to simplify my tax structure enough that I don’t spend many hours wading through useless paperwork.
You start out with a $50 savings account when the kid is born, and by the time he/she’s 18, and ready for college, it would have grown to like 25 million! Today that would barely be enough for tuition, and you’d probably still need a student loan! And nowadays, you’d need a minimum of 50 million to retire comfortably; anyhting less and you’d be on food stamps to get by!
Learn about your own investments and avoid the paid financial planner. If you are thinking about putting money into some kind of account or investment that you don’t understand, don’t do it.
I don’t think they had individual retirement accounts when we were 18. My mother took me to the bank when I was about 12 and opened a bank account for me. (Of course it had her name on the account but it was my money.) I think that was incentive to me to put some money away for the future and spend carefully.
