Custodial Account - Mutual Funds

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blackbeen
Posts: 2
Joined: Sun Jun 24, 2018 8:50 am

Custodial Account - Mutual Funds

Post by blackbeen » Sun Aug 12, 2018 4:01 am

I currently have Uniform Gift To A Minor Account for my 2 sons. I'm with Vanguard for my oldest son (5 years old) and Stockpile with my youngest (2 years old). I have stocks in each of their accounts. Each account has roughly $250 a piece. I want to get out of stocks and buy mutual fund for them (preferably S&P 500 mutual fund). Most of the big brokerage firms (Vanguard & Fidelity) require a minimum of $1,000 or $2,500 to invest in mutual funds. Does anyone know of a brokerage firm I could transfer the funds allocated and invest into a mutual funds where and I can dollar cost average bi-weekly.

Please note: The boys colleges are also funded through 529 college savings plan for youngest and Florida-Prepaid for the oldest so college is taken care of. They also have savings accounts for things they will like to buy. The UGMA will be used for car down the line, wedding or house down payment for them.

livesoft
Posts: 61944
Joined: Thu Mar 01, 2007 8:00 pm

Re: Custodial Account - Mutual Funds

Post by livesoft » Sun Aug 12, 2018 5:49 am

The Fidelity.com web site is touting "No Minimums!!" so maybe your information about them is old. Check in with them again please.

But the reality is that there is unlikely to be any benefit to having a small amount in a UTMA anyways. One can save/invest in their own account until the amount is bigger, then open a UTMA/UGMA somewhere. That's because one can gift something like $15,000 to their child (and so can other people like a spouse) each year without having to worry about an extra tax form.

So I question why you even want to do what you want to do right now.
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A440
Posts: 202
Joined: Mon Sep 02, 2013 7:46 am
Location: NJ

Re: Custodial Account - Mutual Funds

Post by A440 » Sun Aug 12, 2018 5:56 am

Schwab has a $100 minimum for Custodial Accounts with a wide choice of funds. We used their Total Stock Market (SWTSX) for our son and later sold it to fund a Custodial Roth IRA when he got a summer job. You can auto-invest with $100 minimum and choose from a list of frequencies (bi-monthly to quarterly). There are no fees and the expense ratios are low.

We also have UTMA's for both children in Vanguard's STAR fund ($1,000 minimum to open, $1 minimum for additional investments). These have been graciously funded by their grandparents without any stipulations on how to be spent. Our hope is that the funds could be used for a down payment on their first home. The accounts do affect college aid, but we're married, employed, upper-middle class, and have no debt, so I don't expect to receive any need-based aid.

Living Free
Posts: 6
Joined: Thu Jul 19, 2018 7:31 pm

Re: Custodial Account - Mutual Funds

Post by Living Free » Sun Aug 12, 2018 7:42 am

You could use ETF index funds instead of index mutual funds. No minimum just need to buy in multiples of the share prices

gostars
Posts: 326
Joined: Mon Oct 09, 2017 7:53 pm

Re: Custodial Account - Mutual Funds

Post by gostars » Sun Aug 12, 2018 11:40 pm

If Vanguard will let you buy ETFs, and it sounds like they will if they let you buy individual stocks, then VOO (S&P 500 ETF) closed on Friday at $260.12, so that sounds like it might be a good fit, even if you need to put in a couple extra bucks to get the account balance up high enough for 1 share. You wouldn't be able to invest small amounts though, it would have to sit in cash until you have enough for 1 share. Schwab and SWPPX would probably be better.

Fidelity no longer has minimums to purchase most of their index funds, but they still list a $2500 minimum to open custodial accounts, so that's not an option.

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