Roth IRA for a 15 year old

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acorn88
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Roth IRA for a 15 year old

Post by acorn88 » Fri Jan 10, 2020 9:01 am

My son is interested in investing (note he wants to do a regular one now, not a Roth so he can access his funds). Any recommendations on brokerage firms to start this with minimal fees? My thought was just to find an index fund that tracks the S&P 500 but interested in other thoughts!
Last edited by acorn88 on Thu Jan 30, 2020 2:39 pm, edited 1 time in total.

sjt
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Re: Roth IRA for a 15 year old

Post by sjt » Fri Jan 10, 2020 9:20 am

Mine is through Charles Schwab - S&P Index Fund would be fine, Schwab has many low fee funds available. SWPPX is probably the one you're looking for - expense ration of 0.02%
"The one who covets is the poorer man, | For he would have that which he never can; | But he who doesn't have and doesn't crave | Is rich, though you may hold him but a knave." - Wife of Bath tale

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RickBoglehead
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Re: Roth IRA for a 15 year old

Post by RickBoglehead » Fri Jan 10, 2020 9:22 am

acorn88 wrote:
Fri Jan 10, 2020 9:01 am
My son is interested in starting a Roth IRA. I understand it needs to be a custodial Roth due to his age. Any recommendations on brokerage firms to start this with minimal fees? My thought was just to find an index fund that tracks the S&P 500 but interested in other thoughts!
Does your son have earned income from employment? Vanguard mutual funds start at $1,000 minimum investment, and that's only a few. Some use ETFs.
Avid user of forums on variety of interests-financial, home brewing, F-150, PHEV, home repair, etc. Enjoy learning & passing on knowledge. It's PRINCIPAL, not PRINCIPLE. I ADVISE you to seek ADVICE.

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acorn88
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Re: Roth IRA for a 15 year old

Post by acorn88 » Fri Jan 10, 2020 9:23 am

Yes he has a part time job--this income is eligible for investment (he has a W-2). He should be able to invest $1k soon and i'm hoping to add to it throughout the year.
Last edited by acorn88 on Fri Jan 10, 2020 9:29 am, edited 1 time in total.

lakpr
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Re: Roth IRA for a 15 year old

Post by lakpr » Fri Jan 10, 2020 9:24 am

I would suggest Fidelity or Schwab, whichever firm has an office closest to where you live. Or perhaps even TD-Ameritrade as a third choice, if there's a TD Bank office nearby.

Both Fidelity and Schwab have funds that have $0 and $1 minimums respectively.

dukeblue219
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Re: Roth IRA for a 15 year old

Post by dukeblue219 » Fri Jan 10, 2020 9:26 am

Why the office proximity requirement? Is there any need to ever visit a brokerages office?
Last edited by dukeblue219 on Fri Jan 10, 2020 9:27 am, edited 1 time in total.

CppCoder
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Re: Roth IRA for a 15 year old

Post by CppCoder » Fri Jan 10, 2020 9:27 am

I second the idea that you should ensure that your son has qualifying income to permit funding a Roth IRA.

Personally, I like Fidelity. I would recommend FZROX, Fidelity Zero Total [U.S.] Market Index Fund. It has zero fees, a zero expense ratio, and $0 minimum to invest. They also have a zero international fund if he wants some international exposure. If you don't like Fidelity, Vanguard and Schwab have great reputations, as well.

lakpr
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Re: Roth IRA for a 15 year old

Post by lakpr » Fri Jan 10, 2020 9:35 am

dukeblue219 wrote:
Fri Jan 10, 2020 9:26 am
Why the office proximity requirement? Is there any need to ever visit a brokerages office?
Sometimes having an office nearby may come in handy. Whether that's a determining factor in choosing a particular brokerage, is up to the individual. I am just providing my recommendation as the OP asked.

dukeblue219
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Re: Roth IRA for a 15 year old

Post by dukeblue219 » Fri Jan 10, 2020 9:50 am

lakpr wrote:
Fri Jan 10, 2020 9:35 am
dukeblue219 wrote:
Fri Jan 10, 2020 9:26 am
Why the office proximity requirement? Is there any need to ever visit a brokerages office?
Sometimes having an office nearby may come in handy. Whether that's a determining factor in choosing a particular brokerage, is up to the individual. I am just providing my recommendation as the OP asked.
Fair enough.

Topic Author
acorn88
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teenage investor

Post by acorn88 » Thu Jan 30, 2020 10:11 am

My son has taken an interest in starting to invest. This is NOT a lot of money. We are thinking $1k to start and subsequent quarterly investments of ~$100. Recommendations on where he should put his money?

g2morrow
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Re: teenage investor

Post by g2morrow » Thu Jan 30, 2020 10:16 am

big fan of Vanguard but i believe the min for target date fund is $1500 - save up that much, put it in target date fund - once you hit $3k move it to VTSAX - all in a Roth account of course - eh, just my two cents.

lakpr
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Re: teenage investor

Post by lakpr » Thu Jan 30, 2020 10:17 am

No need to wait. Schwab has a minimum of $1 and Fidelity has zero minimums. You can start investing in a total stock market index mutual fund at either, right now.

magicrat
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Re: teenage investor

Post by magicrat » Thu Jan 30, 2020 10:19 am

I recommend that he read this https://www.etf.com/docs/IfYouCan.pdf and then make his own decisions about how to invest.

dbr
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Re: teenage investor

Post by dbr » Thu Jan 30, 2020 10:22 am

I would recommend that your son start here at "Getting Started" https://www.bogleheads.org/wiki/Getting_started and begin his learning process https://www.bogleheads.org/wiki/Getting_started

It might be reasonable to open a brokerage account at Vanguard or Fidelity. Fidelity might be more flexible, as mentioned by others. Just be sure to not let someone at Fidelity talk you into an advisory relationship. For that matter don't let anyone at Vanguard sign you up for VPAS right off the bat.

https://www.nerdwallet.com/blog/investi ... e-account/

https://www.fidelity.com/open-account/custodial-account

Note that UTMA accounts have tax and financial aid considerations for parents and children that need to be understood, probably a good education right there.

An alternative is for your child to be involved in a 529 education savings plan with you as custodian.

https://www.savingforcollege.com/intro- ... a-529-plan

Elysium
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Re: teenage investor

Post by Elysium » Thu Jan 30, 2020 10:25 am

acorn88 wrote:
Thu Jan 30, 2020 10:11 am
My son has taken an interest in starting to invest. This is NOT a lot of money. We are thinking $1k to start and subsequent quarterly investments of ~$100. Recommendations on where he should put his money?
I gave my son $1K to invest when he turned 13. We opened a custodial account at Schwab. He wanted to invest AAPL and I suggested investing in Total Market Index. He insisted AAPL, and I let him try.

I also matched his investment and invested in Total Market Index.

At that time AAPL was around 100ish and today it is 300ish. Total Market has done decent but no where close. He is claiming he is a genius because he invested along Buffett :P
Last edited by Elysium on Thu Jan 30, 2020 10:27 am, edited 1 time in total.

Flyer24
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Re: teenage investor

Post by Flyer24 » Thu Jan 30, 2020 10:26 am

I have merged your previous post about your son so all the information is in one place.

Moderator Flyer24

A440
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Re: Roth IRA for a 15 year old

Post by A440 » Thu Jan 30, 2020 11:31 am

sjt wrote:
Fri Jan 10, 2020 9:20 am
Mine is through Charles Schwab - S&P Index Fund would be fine, Schwab has many low fee funds available. SWPPX is probably the one you're looking for - expense ration of 0.02%
Same (or as teens would say, "Same-ah". :happy
Total Stock Market Index. We do some contribution matching up to his earned income for the year.
I don't know what the future holds, but I know who holds my future.

dbr
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Re: teenage investor

Post by dbr » Thu Jan 30, 2020 11:34 am

Elysium wrote:
Thu Jan 30, 2020 10:25 am
acorn88 wrote:
Thu Jan 30, 2020 10:11 am
My son has taken an interest in starting to invest. This is NOT a lot of money. We are thinking $1k to start and subsequent quarterly investments of ~$100. Recommendations on where he should put his money?
I gave my son $1K to invest when he turned 13. We opened a custodial account at Schwab. He wanted to invest AAPL and I suggested investing in Total Market Index. He insisted AAPL, and I let him try.

I also matched his investment and invested in Total Market Index.

At that time AAPL was around 100ish and today it is 300ish. Total Market has done decent but no where close. He is claiming he is a genius because he invested along Buffett :P
One of the worst possible investing lessons is to have a wildly successful outcome for a bad strategy. I'm not sure investing strategy can be learned by experience. It is certainly helpful to learn and experience investing mechanics and not end up a deer in the headlights when the time comes to be employed and save and invest in earnest.

rkhusky
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Re: teenage investor

Post by rkhusky » Thu Jan 30, 2020 11:45 am

Target Retirement 2060 at Vanguard for $1000. Own thousands and thousands of US and international stocks and bonds.

Reading the annual report and prospectus and list of stocks and bonds might be interesting

retired@50
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Re: teenage investor

Post by retired@50 » Thu Jan 30, 2020 11:47 am

g2morrow wrote:
Thu Jan 30, 2020 10:16 am
big fan of Vanguard but i believe the min for target date fund is $1500 - save up that much, put it in target date fund - once you hit $3k move it to VTSAX - all in a Roth account of course - eh, just my two cents.
The $1,500 number mentioned above is incorrect. The actual number is $1,000 according to the Vanguard website. See link below for the 2060 fund.

I like Vanguard too. It not only gets the youngster's foot in the door toward investing, but gives you an opportunity to teach about their client-owned organizational structure.

Regards,

https://investor.vanguard.com/mutual-fu ... file/VTTSX
This is one person's opinion. Nothing more.

Elysium
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Re: teenage investor

Post by Elysium » Thu Jan 30, 2020 12:02 pm

dbr wrote:
Thu Jan 30, 2020 11:34 am
Elysium wrote:
Thu Jan 30, 2020 10:25 am
acorn88 wrote:
Thu Jan 30, 2020 10:11 am
My son has taken an interest in starting to invest. This is NOT a lot of money. We are thinking $1k to start and subsequent quarterly investments of ~$100. Recommendations on where he should put his money?
I gave my son $1K to invest when he turned 13. We opened a custodial account at Schwab. He wanted to invest AAPL and I suggested investing in Total Market Index. He insisted AAPL, and I let him try.

I also matched his investment and invested in Total Market Index.

At that time AAPL was around 100ish and today it is 300ish. Total Market has done decent but no where close. He is claiming he is a genius because he invested along Buffett :P
One of the worst possible investing lessons is to have a wildly successful outcome for a bad strategy. I'm not sure investing strategy can be learned by experience. It is certainly helpful to learn and experience investing mechanics and not end up a deer in the headlights when the time comes to be employed and save and invest in earnest.
Obviously, my post was tongue-in-cheek.

That said, his AAPL investment wasn't a bad strategy at all. We discussed the pros/cons of single company vs market. We discussed his rationale for selecting this company. We discussed fundamentals, looked at the balance sheet, discussed sales, cash flow, earnings per share, debt, price. Finally we concluded investing a small amount as an experiment was fine. I am not going to force feed a teenager into buying Total Market Index because I believe that is the right strategy, and can explain the merits. If after hearing all that, the teenager still feels they need to try their favorite stock which seemed reasonable, then you should allow them that chance. They will learn one way or other. My son understands risk/reward from this experience, I do not think he will bet large amounts on single stock having seen both side by side over the past few years, in fact he doesn't even look at it, or talk about buying/selling more. He is in many way so far a more buy & hold investor than me.

dbr
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Re: teenage investor

Post by dbr » Thu Jan 30, 2020 12:09 pm

Elysium wrote:
Thu Jan 30, 2020 12:02 pm

Obviously, my post was tongue-in-cheek.

Of course.

That said, his AAPL investment wasn't a bad strategy at all. We discussed the pros/cons of single company vs market. We discussed his rationale for selecting this company. We discussed fundamentals, looked at the balance sheet, discussed sales, cash flow, earnings per share, debt, price. Finally we concluded investing a small amount as an experiment was fine. I am not going to force feed a teenager into buying Total Market Index because I believe that is the right strategy, and can explain the merits. If after hearing all that, the teenager still feels they need to try their favorite stock which seemed reasonable, then you should allow them that chance. They will learn one way or other. My son understands risk/reward from this experience, I do not think he will bet large amounts on single stock having seen both side by side over the past few years, in fact he doesn't even look at it, or talk about buying/selling more. He is in many way so far a more buy & hold investors than me.

The good thing about seeing something go up a lot is the appreciation that this means it can go down a lot. That is a good thing to notice. I wouldn't actually have done things differently than you did. What concerns me more is bringing investment education into schools in the form of stock picking contests or even trying to teach stock picking schemes, and I have seen that.

Elysium
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Re: teenage investor

Post by Elysium » Thu Jan 30, 2020 12:23 pm

dbr wrote:
Thu Jan 30, 2020 12:09 pm
Elysium wrote:
Thu Jan 30, 2020 12:02 pm

Obviously, my post was tongue-in-cheek.

Of course.

That said, his AAPL investment wasn't a bad strategy at all. We discussed the pros/cons of single company vs market. We discussed his rationale for selecting this company. We discussed fundamentals, looked at the balance sheet, discussed sales, cash flow, earnings per share, debt, price. Finally we concluded investing a small amount as an experiment was fine. I am not going to force feed a teenager into buying Total Market Index because I believe that is the right strategy, and can explain the merits. If after hearing all that, the teenager still feels they need to try their favorite stock which seemed reasonable, then you should allow them that chance. They will learn one way or other. My son understands risk/reward from this experience, I do not think he will bet large amounts on single stock having seen both side by side over the past few years, in fact he doesn't even look at it, or talk about buying/selling more. He is in many way so far a more buy & hold investors than me.

The good thing about seeing something go up a lot is the appreciation that this means it can go down a lot. That is a good thing to notice. I wouldn't actually have done things differently than you did. What concerns me more is bringing investment education into schools in the form of stock picking contests or even trying to teach stock picking schemes, and I have seen that.
Yes, agree. I have seen those in schools too and the results are really alarming based on what I have seen. Teenagers thinking they are really good at market timing/stock picking and claiming to know more than they actually do.

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Wiggums
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Re: teenage investor

Post by Wiggums » Thu Jan 30, 2020 12:36 pm

dbr wrote:
Thu Jan 30, 2020 11:34 am
Elysium wrote:
Thu Jan 30, 2020 10:25 am
acorn88 wrote:
Thu Jan 30, 2020 10:11 am
My son has taken an interest in starting to invest. This is NOT a lot of money. We are thinking $1k to start and subsequent quarterly investments of ~$100. Recommendations on where he should put his money?
I gave my son $1K to invest when he turned 13. We opened a custodial account at Schwab. He wanted to invest AAPL and I suggested investing in Total Market Index. He insisted AAPL, and I let him try.

I also matched his investment and invested in Total Market Index.

At that time AAPL was around 100ish and today it is 300ish. Total Market has done decent but no where close. He is claiming he is a genius because he invested along Buffett :P
One of the worst possible investing lessons is to have a wildly successful outcome for a bad strategy. I'm not sure investing strategy can be learned by experience. It is certainly helpful to learn and experience investing mechanics and not end up a deer in the headlights when the time comes to be employed and save and invest in earnest.
Do you let him put the next $1,000 on AAPL at $325?

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