Should I use M1 Finance for kids' gift accounts?

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
White Oak
Posts: 51
Joined: Thu Feb 21, 2019 8:50 pm

Should I use M1 Finance for kids' gift accounts?

Post by White Oak » Fri May 22, 2020 1:48 pm

I've been thinking about gifting our kids and nephews/nieces some small amount of investments every year. There are about 10 kids total, most of them under 10 years old. I haven't done anything yet because I didn't want to cause more tax work for their parents. I'm thinking each account would start with $50 and then add 20-50 per year. So hopefully there'd be ~$1000 to give them each by the time they are graduating.

Here's my current plan: Open a taxable account in my name at M1 Finance, and create a pie for each kid. Each pie would use the same investments, probably 1 or 2 ETFs. Since the account is in my name, I can pay the taxes each year (which should be minimal on this size account). Then when we're ready to give them the investments, either give them the shares, or maybe sell the ETFs and give them cash.

My main question is for the folks who use M1, is it possible to set up the account like this? I wasn't sure if they had a limit on how many pies you can create. I read they have a $100 account minimum, but wasn't sure how this affects an account with multiple pies.

In general, do folks have thoughts about a better way to set this up? My main constraint is not creating work for the parents. Also, I like the idea of having the brokerage keep separate pools of money, rather than doing this in my normal taxable account and tracking it with a spreadsheet. I do have accounts at Vanguard, Schwab, and Fidelity, if there's an easier way to do this at one of those brokerages.

nix4me
Posts: 527
Joined: Sat Oct 13, 2018 9:32 am

Re: Should I use M1 Finance for kids' gift accounts?

Post by nix4me » Fri May 22, 2020 1:59 pm

Put all the money in 1 account and 1 fund. Use a spreadsheet to divide by 10 for each kid. Simple is simple.

Topic Author
White Oak
Posts: 51
Joined: Thu Feb 21, 2019 8:50 pm

Re: Should I use M1 Finance for kids' gift accounts?

Post by White Oak » Fri May 22, 2020 2:02 pm

nix4me wrote:
Fri May 22, 2020 1:59 pm
Put all the money in 1 account and 1 fund. Use a spreadsheet to divide by 10 for each kid. Simple is simple.
Thanks for the suggestion. I could do that, but I'd like some flexibility in having more for certain kids. I'll be putting in more for our own kids. Also, I'll probably put in more for the older kids so that things even out in the end.

I'd like to avoid a spreadsheet if possible. I already have enough of those floating around...

dru808
Posts: 827
Joined: Sat Oct 15, 2011 2:42 pm
Location: mid pac

Re: Should I use M1 Finance for kids' gift accounts?

Post by dru808 » Fri May 22, 2020 2:08 pm

You cannot set up 10 taxable accounts at m1.

You can have 10 separate slices in a single taxable account at m1. Each slice could be named “Eric, Annie, Joe etc”
60% US equity | 25% International equity | 15% US Treasury bonds

Topic Author
White Oak
Posts: 51
Joined: Thu Feb 21, 2019 8:50 pm

Re: Should I use M1 Finance for kids' gift accounts?

Post by White Oak » Fri May 22, 2020 2:17 pm

dru808 wrote:
Fri May 22, 2020 2:08 pm
You cannot set up 10 taxable accounts at m1.

You can have 10 separate slices in a single taxable account at m1. Each slice could be named “Eric, Annie, Joe etc”
Yeah, I don't want 10 separate taxable accounts at M1.

I'd like 10 separate pies, not really 10 slices of 1 pie. I don't want to specify how much in percentage that goes to Eric. I'd like to be able to put in $20 for Eric's birthday, etc.

I thought I've read on the forum about people having multiple pies in one account, but I'm not really sure how that works.

dru808
Posts: 827
Joined: Sat Oct 15, 2011 2:42 pm
Location: mid pac

Re: Should I use M1 Finance for kids' gift accounts?

Post by dru808 » Fri May 22, 2020 2:21 pm

White Oak wrote:
Fri May 22, 2020 2:17 pm
dru808 wrote:
Fri May 22, 2020 2:08 pm
You cannot set up 10 taxable accounts at m1.

You can have 10 separate slices in a single taxable account at m1. Each slice could be named “Eric, Annie, Joe etc”
Yeah, I don't want 10 separate taxable accounts at M1.

I'd like 10 separate pies, not really 10 slices of 1 pie. I don't want to specify how much in percentage that goes to Eric. I'd like to be able to put in $20 for Eric's birthday, etc.

I thought I've read on the forum about people having multiple pies in one account, but I'm not really sure how that works.

Yes you can add 10 pies to a single account, thats what I meant, I got the wording mixed up. You’d also want to turn off auto invest and manually contribute to “Eric” for his birthday, instead of adding “Eric’s” money and have it spread out among all the kids.

Edit, the slices is what I’m talking about, instead of having a slice called vti you’d have 10 separate vti slices labeled “Eric,Jon” etc. they would be in the same ie but would be independent if auto invest is turned off.

Slices/pies, I’m mixing up terminology but you can have 10 independent (sub accounts, slices, pies) in the same pie/account.
Last edited by dru808 on Fri May 22, 2020 2:28 pm, edited 2 times in total.
60% US equity | 25% International equity | 15% US Treasury bonds

aristotelian
Posts: 7380
Joined: Wed Jan 11, 2017 8:05 pm

Re: Should I use M1 Finance for kids' gift accounts?

Post by aristotelian » Fri May 22, 2020 2:23 pm

dru808 wrote:
Fri May 22, 2020 2:08 pm
You cannot set up 10 taxable accounts at m1.

You can have 10 separate slices in a single taxable account at m1. Each slice could be named “Eric, Annie, Joe etc”
You absolutely can set up separate accounts in your name. In fact, I do it for exactly this purpose. I have one login that enables to access any of three separate accounts. When you log in there is a drop down list that let's you switch from one account to the next.

https://support.m1finance.com/hc/en-us/ ... s-Accounts

dru808
Posts: 827
Joined: Sat Oct 15, 2011 2:42 pm
Location: mid pac

Re: Should I use M1 Finance for kids' gift accounts?

Post by dru808 » Fri May 22, 2020 2:24 pm

aristotelian wrote:
Fri May 22, 2020 2:23 pm
dru808 wrote:
Fri May 22, 2020 2:08 pm
You cannot set up 10 taxable accounts at m1.

You can have 10 separate slices in a single taxable account at m1. Each slice could be named “Eric, Annie, Joe etc”
You absolutely can set up separate accounts in your name. In fact, I do it for exactly this purpose. I have one login that enables to access any of three separate accounts. When you log in there is a drop down list that let's you switch from one account to the next.

https://support.m1finance.com/hc/en-us/ ... s-Accounts
Edit, I don’t believe the op can set up a taxable account for all children
60% US equity | 25% International equity | 15% US Treasury bonds

Topic Author
White Oak
Posts: 51
Joined: Thu Feb 21, 2019 8:50 pm

Re: Should I use M1 Finance for kids' gift accounts?

Post by White Oak » Fri May 22, 2020 2:36 pm

aristotelian wrote:
Fri May 22, 2020 2:23 pm
You absolutely can set up separate accounts in your name. In fact, I do it for exactly this purpose. I have one login that enables to access any of three separate accounts. When you log in there is a drop down list that let's you switch from one account to the next.

https://support.m1finance.com/hc/en-us/ ... s-Accounts
Thank you aristotelian. At the link you posted, it says that I'm limited to 5 accounts. That wouldn't allow me a different account for each kid since I have more than 5 I'd like to give to.

nix4me
Posts: 527
Joined: Sat Oct 13, 2018 9:32 am

Re: Should I use M1 Finance for kids' gift accounts?

Post by nix4me » Fri May 22, 2020 2:41 pm

You can have 1 account, with 1 pie, with 10 sub pies, each with 1 slice or more.

Pie - kids
Sub pie - kid1
Slice - VTI
Sub pie - kid2
Slice - VOO
Etc

I think it will allow 10. Try it.

Topic Author
White Oak
Posts: 51
Joined: Thu Feb 21, 2019 8:50 pm

Re: Should I use M1 Finance for kids' gift accounts?

Post by White Oak » Fri May 22, 2020 2:50 pm

nix4me wrote:
Fri May 22, 2020 2:41 pm
You can have 1 account, with 1 pie, with 10 sub pies, each with 1 slice or more.

Pie - kids
Sub pie - kid1
Slice - VTI
Sub pie - kid2
Slice - VOO
Etc

I think it will allow 10. Try it.
Okay, I'm starting to understand, I think. It sounds like you all are describing what is here:

https://support.m1finance.com/hc/en-us/ ... Second-Pie

If I have 10 slices, one for each kid, and want to add $20 just for Eric's birthday, how would I do that? As dru808 says, can I just add that money manually to that slice? I thought I had to specify the fraction (overall percentage) for each slice.

dru808
Posts: 827
Joined: Sat Oct 15, 2011 2:42 pm
Location: mid pac

Re: Should I use M1 Finance for kids' gift accounts?

Post by dru808 » Fri May 22, 2020 2:51 pm

White Oak wrote:
Fri May 22, 2020 2:50 pm
nix4me wrote:
Fri May 22, 2020 2:41 pm
You can have 1 account, with 1 pie, with 10 sub pies, each with 1 slice or more.

Pie - kids
Sub pie - kid1
Slice - VTI
Sub pie - kid2
Slice - VOO
Etc

I think it will allow 10. Try it.
Okay, I'm starting to understand, I think. It sounds like you all are describing what is here:

https://support.m1finance.com/hc/en-us/ ... Second-Pie

If I have 10 slices, one for each kid, and want to add $20 just for Eric's birthday, how would I do that? As dru808 says, can I just add that money manually to that slice? I thought I had to specify the fraction (overall percentage) for each slice.

Turn off auto invest, manually add to slice $20. If you keep the % the same initially, manually invest and do not rebalance, rebalance will trigger selling and buying to equal slices out. Do not REBALANCE!
60% US equity | 25% International equity | 15% US Treasury bonds

nix4me
Posts: 527
Joined: Sat Oct 13, 2018 9:32 am

Re: Should I use M1 Finance for kids' gift accounts?

Post by nix4me » Fri May 22, 2020 2:55 pm

You need sub pies unless you are going to use different funds for each slice. Open m1finance account and play with it. I just created what you want in 5 minutes. I went to “my pies” and created 11 pies. I then put 10 of the pies into 1 pie. Then I chose 1 slice of VOO in each sub pie. Works perfectly. Then just manually add money. Then name each sub pie for each kid.
https://m1.finance/kDL7EpvRlbIR
Last edited by nix4me on Fri May 22, 2020 3:00 pm, edited 1 time in total.

User avatar
noraz123
Posts: 323
Joined: Tue Jun 10, 2014 1:23 am
Location: SF Bay Area

Re: Should I use M1 Finance for kids' gift accounts?

Post by noraz123 » Fri May 22, 2020 2:58 pm

nix4me wrote:
Fri May 22, 2020 1:59 pm
Put all the money in 1 account and 1 fund. Use a spreadsheet to divide by 10 for each kid. Simple is simple.
I agree with nix4me. Perhaps I don''t know/understand all your desires, but having different accounts for different kids seems too difficult. And what happens if stock market goes vastly up/down after giving the older children? If your goal is to give $1000 to each kid once they reach a certain age, then just invest the money in your personal account, and withdraw when time time comes.

If the plan is to have money available for education, why not setup 529 accounts? That would solve the taxation issues. Moreover, the parents of the kids may already have 529 accounts setup.

The only arguments against 529 to me are:
  • Money is earmarked for education, and you may not want to have strings attached to the gift.
  • Continuously donating $50 to a kid's 529 doesn't feel as special to the kid as receiving $1000 when they are older.
Regardless of what you do, this is very thoughtful and generous of you!

Topic Author
White Oak
Posts: 51
Joined: Thu Feb 21, 2019 8:50 pm

Re: Should I use M1 Finance for kids' gift accounts?

Post by White Oak » Fri May 22, 2020 3:01 pm

nix4me wrote:
Fri May 22, 2020 2:55 pm
You need sub pies unless you are going to use different funds for each slice. Open m1finance account and play with it. I just created what you want in 5 minutes. I went to “my pies” and created 11 pies. I then put 10 of the pies into 1 pie. Then I chose 1 slice of VOO in each sub pie. Works perfectly. Then just manually add money. Then name each sub pie for each kid.
Thanks nix4me. I was hoping to confirm that it is possible before going though the hassle of opening the account (and potentially having to close it if it didn't work). But now that you all have confirmed that it is possible, I'm going to try it out.

Thanks for the help everyone!

aristotelian
Posts: 7380
Joined: Wed Jan 11, 2017 8:05 pm

Re: Should I use M1 Finance for kids' gift accounts?

Post by aristotelian » Fri May 22, 2020 3:02 pm

White Oak wrote:
Fri May 22, 2020 2:17 pm
dru808 wrote:
Fri May 22, 2020 2:08 pm
You cannot set up 10 taxable accounts at m1.

You can have 10 separate slices in a single taxable account at m1. Each slice could be named “Eric, Annie, Joe etc”
Yeah, I don't want 10 separate taxable accounts at M1.

I'd like 10 separate pies, not really 10 slices of 1 pie. I don't want to specify how much in percentage that goes to Eric. I'd like to be able to put in $20 for Eric's birthday, etc.

I thought I've read on the forum about people having multiple pies in one account, but I'm not really sure how that works.
I missed that. That's a lot of kids! Personally, I think I would just do one big "gift for the kids" account and then distribute in a way that seems fair later on. Either way you are going to run into discrepancies based on the kids' ages, market returns, etc. I think 10 pies in one account will work but I don't really see the upside and a lot of opportunity for messing up your system, issues harvesting losses and gains, etc.

nix4me
Posts: 527
Joined: Sat Oct 13, 2018 9:32 am

Re: Should I use M1 Finance for kids' gift accounts?

Post by nix4me » Fri May 22, 2020 3:05 pm

White Oak wrote:
Fri May 22, 2020 3:01 pm
nix4me wrote:
Fri May 22, 2020 2:55 pm
You need sub pies unless you are going to use different funds for each slice. Open m1finance account and play with it. I just created what you want in 5 minutes. I went to “my pies” and created 11 pies. I then put 10 of the pies into 1 pie. Then I chose 1 slice of VOO in each sub pie. Works perfectly. Then just manually add money. Then name each sub pie for each kid.
Thanks nix4me. I was hoping to confirm that it is possible before going though the hassle of opening the account (and potentially having to close it if it didn't work). But now that you all have confirmed that it is possible, I'm going to try it out.

Thanks for the help everyone!
Welcome. M1finance is great, allows partial ETF shares as well.

Topic Author
White Oak
Posts: 51
Joined: Thu Feb 21, 2019 8:50 pm

Re: Should I use M1 Finance for kids' gift accounts?

Post by White Oak » Fri May 22, 2020 3:09 pm

noraz123 wrote:
Fri May 22, 2020 2:58 pm

I agree with nix4me. Perhaps I don''t know/understand all your desires, but having different accounts for different kids seems too difficult. And what happens if stock market goes vastly up/down after giving the older children? If your goal is to give $1000 to each kid once they reach a certain age, then just invest the money in your personal account, and withdraw when time time comes.

If the plan is to have money available for education, why not setup 529 accounts? That would solve the taxation issues. Moreover, the parents of the kids may already have 529 accounts setup.

The only arguments against 529 to me are:
  • Money is earmarked for education, and you may not want to have strings attached to the gift.
  • Continuously donating $50 to a kid's 529 doesn't feel as special to the kid as receiving $1000 when they are older.
Regardless of what you do, this is very thoughtful and generous of you!
Thanks for the thoughts noraz123. I do have 529 accounts for my kids, and there is more money in those accounts.

My idea for these accounts is to have a place for birthday/Christmas money, that would hopefully make a nice gift when they graduate (not exactly sure when I'd give it to them, after high school or college). Also hopefully it would help them see a little what investing is like, especially as they get into the teen years. I haven't decided on all the details, but I'd probably provide a yearly "statement" so they can see how the money is growing.

annu
Posts: 584
Joined: Mon Nov 04, 2019 7:55 pm

Re: Should I use M1 Finance for kids' gift accounts?

Post by annu » Fri May 22, 2020 7:28 pm

What if some kids get their money in down years, even though with "certain kids" to get more money? :D

And "not certain kids" got lucky and ended up with windfalls due to crazy times......

I would just give cash, as regular uncles do. Bot over complicate things.

For your kids, 529 is pretty decent option.

Post Reply