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UTMA vs. 529: Custodial Investment Options for Your Child's Future

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Bodine:
Not sure if this has been discussed here before, also not sure if this will be the proper thread for it, but since this is a all-encompassing WM/FSUW relationship site then this is just one segment of the myriad of subject to be discussed.

Custodial investment for your child/ren UTMA / 529 (US-based). Not sure if such is available in Europe, Aus or elsewhere.

When our kid turned 1, one of the things I started is the UTMA investment. It’s a custodial account that invest monies you put in for your kid, sort of like a trust but without lawyers getting involved.

As a parent you have an option to invest via UTMA or 529. Both a great programs but with notable differences. 529 is really and investment geared solely as a ‘college fund’. There are exemption but it is strictly to provide towards expenses for their higher education when they reach those years.

UTMA is different in a sense it’s strictly an investment savings for your child’s nest egg to have and use of their choosing or needs when they reach adult age (18-25). You put money in it over the years and it sits there compounding until it transfers to your child at the appropriate age.

Both invests in stocks, mutual funds, etc. so it’s much better than a savings account as it yields a much higher earning potential.

I chose Fidelity Investment for the option of having the account available to anyone to gift monies in the account from our relatives, etc. No one, including the Custodian, can take money out of the account other than the child and at the scheduled maturity.

It’s another splendid way to supplement the various other ways to plan for your child/ren’s future and security.

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