New parent this July - Looking for investment advice

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0cean23
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New parent this July - Looking for investment advice

Post by 0cean23 » Wed Feb 22, 2012 9:48 am

Hi all,

I will be a new dad this July and my wife and I would like to start a small investment or savings account for our child. What do you recommend we should start investing for our child? We have about $5000 to invest for our child. Should we start a savings, 529 plan, or bond savings?

Grt2bOutdoors
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Re: New parent this July - Looking for investment advice

Post by Grt2bOutdoors » Wed Feb 22, 2012 9:55 am

0cean23 wrote:Hi all,

I will be a new dad this July and my wife and I would like to start a small investment or savings account for our child. What do you recommend we should start investing for our child? We have about $5000 to invest for our child. Should we start a savings, 529 plan, or bond savings?
Assuming you already have a will and life insurance in place.
A 529 plan is ideal if you believe your child will be attending an institution of higher education in the future. Depending on the state you reside in, you may be able to realize a tax deduction on your state returns.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

alanf56
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Re: New parent this July - Looking for investment advice

Post by alanf56 » Wed Feb 22, 2012 10:00 am

Spend it all now before the child arrives because once he/she arrives they will get it all for many years to come! :)

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Jay69
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Re: New parent this July - Looking for investment advice

Post by Jay69 » Wed Feb 22, 2012 10:44 am

Congrats, you do know you cant just stop at 1 :wink:

I assume you have all your tax avantaged accounts filled at this point, if not fill those first.

Nothing wrong with a 529 or your last chace to buy a used convertible before the baby arives.

Not investing advice but put off buying anything you can that will leave you more time to send with them when they are young, they grow so darn fast. I loved each and every year with my kids thus far but those 1-3 year ages were a blast, every thing is so new to them plus they can do just about anything without getting into much trouble!
"Out of clutter, find simplicity” Albert Einstein

0cean23
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Re: New parent this July - Looking for investment advice

Post by 0cean23 » Wed Feb 22, 2012 10:58 am

We have the life insurance in place for both me and my wife. So for tax advantages we should start with a 529 plan. I live in New York City currently. Which 529 plan do you recommend? Thank you!

Grt2bOutdoors
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Re: New parent this July - Looking for investment advice

Post by Grt2bOutdoors » Wed Feb 22, 2012 11:03 am

0cean23 wrote:We have the life insurance in place for both me and my wife. So for tax advantages we should start with a 529 plan. I live in New York City currently. Which 529 plan do you recommend? Thank you!
NYS Direct 529 Plan - tax deductible on NYS income tax returns up to $10,000 for Married Filing Jointly. A no-brainer, the investments are Vanguard index funds, you can select an age-based glide plan or static. For ease of use, age-based glide plan is good, low expense ratio of 25bps, no fee to invest. The program administrator is UPromise Investments. I use this plan for my nieces and nephews - no complaints. Low minimum investment of $25, low contribution amounts of $25. That's right, just $25 will get you in the door, here.

Only caveat is this, if you leave NYS and attempt to move assets out of this 529 plan to another plan and previously took the tax deduction, the state will come after you for the value of that deduction. This will only apply if withdrawals are not higher education payment related.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

DoWahDaddy
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Re: New parent this July - Looking for investment advice

Post by DoWahDaddy » Wed Feb 22, 2012 11:42 am

You are making a mistake worrying about investing money right now. You should be more concerned with investing your time.

Watch movies at home when you can spend two hours on the sofa without needing to get up. Better yet, go out and do it in a theater. Go out to dinner, a few times. Somewhere you guys always love, and somewhere you've always wanted to try. Treat yourselves now. Celebrate the relationship that was, the one that will end up bringing these little monsters into existence. Maybe more important, do some outside the box kind of stuff. Like if you always talked about taking a dancing or cooking class together, do that now. 4 months along is she? She can dance. A ball game maybe if you're both fans. When you do get a moment without the kids, you wont want to spend it doing stuff like that, you'll do dinner or hang out with friends. And the whole time you'll be talking about the kids. Different world, man.

If you absolutely must invest money, then do some type of work on the house you've been putting off that will be impossible once the kid comes (due to noise, or dust, especially if you're a DIYer.)

And convince that woman not to work all the way through the delivery date. Relax now, because as a mother, she will never again be as relaxed as she is today, so she would benefit from taking the time to enjoy it. As men, we don't understand this, we can only observe with our shields up.

And there's one more thing you should be doing before that kid shows up that isn't exactly forum-appropriate subject matter, but dagnabit, it's much more important at this stage of your life than setting up a gosh darn 529 plan. You better believe Jack Bogle agrees with that logic. If I'm wrong, Jack, then respond so.
Me: 75/25 stocks/bonds | Son: 45/45/10 matchbox/hotwheels/thomas & friends

vlad525
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Re: New parent this July - Looking for investment advice

Post by vlad525 » Wed Feb 22, 2012 12:53 pm

I dont really have a lot more to add to the investing part as 529s are a great option and I am contributing to one for my daughter, but do agree with other posters to go out and do activities you have always wanted to with your wife. As a father of a 14 month old I can easily say that your life will be forever changed. A few things to note from my wife and I's experience:

Check out 2nd hand stores. Many items both new and old can be had for a fraction of the cost. Just make sure to properly clean anything you may buy from there.

Dont go overboard on clothes. You will get them as presents from everybody and usually parents are chomping at the bit to get rid of them for free. We havent needed to buy any clothes for our 14 month old at all so far...not to say that we havent though.

Buy the better/safer car seat. Sure it may cost a little more, but installation is usually easier with the retractable clips and they are safer.

The last thing is take time out to enjoy time as a family. Dont get too caught up in work and miss all the wonderful moments as they grow up.

wilked
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Re: New parent this July - Looking for investment advice

Post by wilked » Wed Feb 22, 2012 1:15 pm

Did you max your Roth for 2011? Will you max it for 2012?

NoVa Lurker
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Re: New parent this July - Looking for investment advice

Post by NoVa Lurker » Wed Feb 22, 2012 2:05 pm

All good advice above.

529s are useful, but make sure to fill your tax-advantaged retirement accounts before funding a 529.

When it comes to the first child, investment advice is probably less important than "not-spending" advice.

Believe it or not, with the exception of car seats, diapers, wipes, and a thermometer, you can live without almost every baby item.

Used toys and used clothes are perfect, whether from garage sales, consignment sales, or just gifts from friends who are done having kids.

Our 10-month-old loves anything new, but he's tired of it after 15 minutes. He would rather play with a belt he's never seen before, instead of a $30 toy that his grandparents bought him yesterday.

So don't over-spend on baby stuff. DO over-spend on doing fun stuff with your significant other before the baby arrives.

TRC
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Re: New parent this July - Looking for investment advice

Post by TRC » Wed Feb 22, 2012 4:43 pm

Here's my advice: SLEEP NOW WHILE YOU CAN

Atilla
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Re: New parent this July - Looking for investment advice

Post by Atilla » Wed Feb 22, 2012 5:27 pm

Invest in your marriage. Now with a kid in the picture - if she decides to split a few years down the road, it becomes much more expensive for you. Big monthly payments for many years along with all your other regular expenses. The emotional toll is a whole nother thing.

Start a small 529 account and buy some electronic I bonds in the kid's name with your money and don't sweat it. And do what it takes to maintain a happy marriage. Every day. All the time. Everyone will be better off emotionally and financially.
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epilnk
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Re: New parent this July - Looking for investment advice

Post by epilnk » Wed Feb 22, 2012 11:55 pm

Drop the cash in a low cost 529 and let it ride. A nice age adjusted plan is good, you won't want to be fussing with it later.

Don't overspend on baby stuff. Seriously, avoid the gear. Babies are cheap if you do it right. Worthwhile gear expenditures are an easy to fold (with one hand) lightweight stroller, and anything that buys you sleep (swings, vibrating bouncy seats etc, though wait till you have that problem to solve). Extra money on car seats does not buy you extra safety, the most important factor is that it fits your car well. And don't let anyone give you the fancy high chair.

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interplanetjanet
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Re: New parent this July - Looking for investment advice

Post by interplanetjanet » Thu Feb 23, 2012 4:00 am

epilnk wrote:Don't overspend on baby stuff. Seriously, avoid the gear. Babies are cheap if you do it right. Worthwhile gear expenditures are an easy to fold (with one hand) lightweight stroller, and anything that buys you sleep (swings, vibrating bouncy seats etc, though wait till you have that problem to solve). Extra money on car seats does not buy you extra safety, the most important factor is that it fits your car well. And don't let anyone give you the fancy high chair.
I would add to this - find a solidly made crib that is *easy to clean* and that you're comfortable with your baby gnawing on. Ones with a side that can be operated one-handed are very helpful, though these are less common now in the wake of new safety standards. This isn't a purchase you need right away (a bassinet was easier when mine were infants, and handy to set on the bed at times) but it's worth spending a bit of time to find one that's just right. Height is important, you are probably both going to be bending over it a *lot* for a while.

Get sleep while you can. Parenthood gives you superpowers eventually like the ability to function with a crabby baby who's kept you up for a day and a half straight, and to be totally unfazed by any bodily fluids, but they take time to kick in.

-janet

NoVa Lurker
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Re: New parent this July - Looking for investment advice

Post by NoVa Lurker » Thu Feb 23, 2012 4:26 pm

interplanetjanet wrote:I would add to this - find a solidly made crib that is *easy to clean* and that you're comfortable with your baby gnawing on. Ones with a side that can be operated one-handed are very helpful, though these are less common now in the wake of new safety standards.
Just to be clear, these are "less common" now because they are completely banned:

http://www.msnbc.msn.com/id/40678788/ns ... -outlawed/

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interplanetjanet
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Re: New parent this July - Looking for investment advice

Post by interplanetjanet » Thu Feb 23, 2012 4:30 pm

NoVa Lurker wrote:
interplanetjanet wrote:I would add to this - find a solidly made crib that is *easy to clean* and that you're comfortable with your baby gnawing on. Ones with a side that can be operated one-handed are very helpful, though these are less common now in the wake of new safety standards.
Just to be clear, these are "less common" now because they are completely banned:

http://www.msnbc.msn.com/id/40678788/ns ... -outlawed/
Those are drop-side cribs and were banned. I was referring to other alternatives like the hinged "drop gate" cribs and similar, which are quite available (just helped a friend get one last month).

Thanks.

-janet

GeauxBR
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Re: New parent this July - Looking for investment advice

Post by GeauxBR » Thu Feb 23, 2012 4:48 pm

being a new dad myself (son in November) the only thing I can say is sleep. Just. Sleep.

My son recently made 3months and started sleeping through the night. It's like a whole new life.

And since this is a financial forum, I'd hold the money for a few months after birth to cover any unexpected costs and/or medical issues that may arise.

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og15F1
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Re: New parent this July - Looking for investment advice

Post by og15F1 » Fri Feb 24, 2012 2:18 am

One money-related suggestion would be to re-calculate your 2012 taxes to include another child credit if you qualify and then readjust withholdings. This may free up a few bucks for investing during the year.

Congratulations :wink:

DoWahDaddy
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Re: New parent this July - Looking for investment advice

Post by DoWahDaddy » Fri Feb 24, 2012 1:18 pm

GeauxBR wrote:My son recently made 3months and started sleeping through the night. It's like a whole new life.
It's a brief respite, nothing more. Be thankful you've had the break.
Me: 75/25 stocks/bonds | Son: 45/45/10 matchbox/hotwheels/thomas & friends

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ruralavalon
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Re: New parent this July - Looking for investment advice

Post by ruralavalon » Fri Feb 24, 2012 5:47 pm

Nothing to add, just congraulations :D .
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

Gray
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Re: New parent this July - Looking for investment advice

Post by Gray » Fri Feb 24, 2012 11:55 pm

Invest in ziploc bags for spent diapers. Kept the smell to a manageable level. The diaper genie is crap.

angelescrest
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Re: New parent this July - Looking for investment advice

Post by angelescrest » Sat Feb 25, 2012 11:41 am

I love how we talk about sleep as if it is an actual commodity we can invest in for later. In true Boglehead style. Unfortunately you can't do that, you will be tired regardless. I've found it good advice to max out our 403(b) and then Roth IRA before looking at the 529. Since we don't have that much to invest, we pretty much stop there. I can pull out the Roth contributions in 17 years (our baby is less than 1 yr), which is a decent amount though I know not enough to pay for college in the future. If we had more money to invest and get tax savings, I would then find a good 529.

The points made about marriage are priceless. I would invest 80% in retirement accounts and then put 20% of it in good marriage counseling to prepare for parenthood. It might be the best investment, even financial investment, you make.

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kingsnake
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Re: New parent this July - Looking for investment advice

Post by kingsnake » Sun Feb 26, 2012 10:30 am

diapers.com or sams club

easy to make your own baby food

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