I want to make my children millionaires.

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marcopolo
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Re: I want to make my children millionaires.

Post by marcopolo » Fri Nov 22, 2019 2:56 pm

PennyPinscher wrote:
Thu Nov 21, 2019 8:57 am
Wow! I did not expect so many genuine responses to my post! I should have added my income is so low because I'm currently working part time while working on my bachelor's degree. I don't intend to be broke forever!

After reading every single reply, I have decided on doing a pair of 529's and continuing to focus on my own wealth. Getting them into and out of college without a full burden of debt is probably the best thing I can do for them.

I appreciate everyone taking the time to respond to my question, I'm blown away!
Please reconsider the 529 plan. See my post above.
Building your own wealth and getting your kids through college without debt are great goals. For many people (mostly high-income), 529 plans are a great tool to help in that process, but for your situation, focusing on your own tax-advantaged savings vehicles is almost certainly a better option.
Once in a while you get shown the light, in the strangest of places if you look at it right.

kelvan80
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Re: I want to make my children millionaires.

Post by kelvan80 » Fri Nov 22, 2019 4:24 pm

As an active duty spouse and mom of 4, I'd recommend putting as much into the TSP as you can. You're retirement and self sufficiency is the best gift you can give your children. They will either follow your lead and earn their own million or they won't and then do you really want to hand them a million to watch them blow it. I'd also recommend trips and experiences over stuff at the holidays or encouraging others to save for college for them instead of extra crap. That way you have less to move and they get a jump start I'd they want to go to school.

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dratkinson
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Re: I want to make my children millionaires.

Post by dratkinson » Fri Nov 22, 2019 4:46 pm

RadAudit wrote:
Fri Nov 22, 2019 10:21 am
PennyPinscher wrote:
Thu Nov 21, 2019 8:57 am
I have decided on doing a pair of 529's and continuing to focus on my own wealth. Getting them into and out of college without a full burden of debt is probably the best thing I can do for them.
That's probably one of the surest ways to help make them become millionaires. Hopefully, they'll figure out a way to stay millionaires.
+1 Take care of yourself first. So you do not become a financial burden for your children. Then your remaining wealth will pass through them as an inheritance to take care of your grandchildren.

Teach your children to follow the same plan.

"Rich people plan for 3 generations, poor people plan for Saturday night."
d.r.a, not dr.a. | I'm a novice investor, you are forewarned.

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willthrill81
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Re: I want to make my children millionaires.

Post by willthrill81 » Sat Nov 23, 2019 5:41 pm

JoMoney wrote:
Wed Nov 20, 2019 9:36 am
I'm not sure you gifting them money / investment account is the way that will teach them how to spend less than they earn.
:thumbsup

The OP should be retitled to "I want to make my children millionaires and keep them that way."
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

CoastalWinds
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Re: I want to make my children millionaires.

Post by CoastalWinds » Sat Nov 23, 2019 5:47 pm

Hi Zack, can I call you ‘dad’? 😂

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arcticpineapplecorp.
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Re: I want to make my children millionaires.

Post by arcticpineapplecorp. » Sat Nov 23, 2019 9:48 pm

PennyPinscher wrote:
Wed Nov 20, 2019 8:25 am
The main point of my post: I have two kids, 5 and 6. I want to start them an account now so they can have a head start on life and not have to scrape together pennies like I do. They can't have a Roth IRA from what I've read. Is my only option to start 2 brokerage accounts and when they're older and employed, transfer them over into an IRA in their names? Is there a better option? I could also just do an additional $100 a month into my current portfolio and "call it theirs" but I want them to see individually how my small contributions grew over their lifetime so they too take saving/investing seriously.

Thank you all in advance!
let's say you invest $100 a month for each of them and earn 8% per year (a big if, but go with me on this journey).

you want them to start saving and investing too (as you say) so at what age would you like them to start doing that?

Let's say age 25 when they land their first job after graduating college (and graduate school). What would they have at age 25 (say 20 years from now)?

$58,902.04

(in excel type =FV(.08/12,20*12,-100) which says "earn 8% per year for 20 years investing $100 each month.

now I'd be pleased as punch if a loving father offered me $58,902 at age 25. But would I understand how it grew? No. You could say $100 a month is $1200 a year. $1200 a year for 20 years is $24,000. So dad turned $24,000 into $58,902 by investing (for 20 years).

Would that excite them? I.e., would investing $100 a month starting at age 25 to get $58,902 by the time they are 45 blow their minds?

I doubt it.

But if instead you say you gave them a good head start (the $58,902 you'd give them at 25) to add to their own $100 a month from 25-45 then they'd turn your $58,902 and their $100 a month contributions from 25-45 into:

$349,100.78

(in excel type =FV(.08/12,40*12,-100)

now we're getting somewhere. now that "might" excite them to have $349,100 at 45.

Keep going having them invest another $100 a month til 65 and what do they get? (by your starting $100 a month at age 5 and them taking over at 25 and continuing $100 a month for another 40 years--60 years in total):

try it yourself:

=FV(.08/12,60*12,-100)

what did you get? Don't peek.

$1,778,852.75

that's a goodly amount of money. you've technically "help" make them a millionaire. Mission accomplished I'd say.

but remember that a million dollars 60 years from now won't buy you what a million dollars buys you today.

so hopefully you can motivate them to invest more than $100 a month from 25-65.

Then they can thank you when you're in the old folk's home (and maybe do the same for their own kids, should they choose to have any).
"May you live as long as you want and never want as long as you live" -- Irish Blessing | "Invest we must" -- Jack Bogle

AF_Engineer
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Re: I want to make my children millionaires.

Post by AF_Engineer » Sat Nov 23, 2019 10:45 pm

Hey OP,

I'm just about to retire from the Air Force after 27 years - loved every minute of it, what a blessing to serve. We have 2 kids, now aged 20 & 22. I used to have the same thoughts as you did, in wanting to pass along a lot of money to my kids. But over the years I came to see the wisdom in what most of the above posts suggest: focus on teaching them strong financial life skills, invest in their education, and focus on building my retirement so you're not a financial burden to them later. The GI Bill is an awesome tool - our oldest decided not to go to college (but is now a welder making good money, thanks Mike Rowe!), and so the GI Bill is being used for our youngest to pay for all 4 years. But we had socked away money into 529 accounts for 15 years, and now that money is available for other purposes (grandkids' education, down payment on house after tax reduction, etc.) So I definitely recommend investing in a strong 529 account - there are websites you can Google that rank the 529's. And definitely stay away from First Command - they're good people, but you can save/invest on your own without their load fees.

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oldcomputerguy
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Re: I want to make my children millionaires.

Post by oldcomputerguy » Sat Nov 23, 2019 11:24 pm

Some contentious posts were removed. Please keep the discussion centered on the OP's questions, and remember that forum policy requires that we must remain civil at all times, especially to new posters.

PennyPinscher, welcome to the forum!
"I’ve come around to this: If you’re dumb, surround yourself with smart people; and if you’re smart, surround yourself with smart people who disagree with you." (Aaron Sorkin)

kelvan80
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Re: I want to make my children millionaires.

Post by kelvan80 » Sat Nov 23, 2019 11:38 pm

Also wanted to plug the Military FI group on Facebook if it's allowed We could use your enthusiasm helping other people down the path to financial independence OP.

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BolderBoy
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Re: I want to make my children millionaires.

Post by BolderBoy » Sun Nov 24, 2019 9:37 am

Jack FFR1846 wrote:
Wed Nov 20, 2019 9:39 am
Look around at credit unions. I know mine (DCU) pays 6.17% on the first $1k in each member's primary savings account. If you're somewhere DCU serves, open an account for each kid.
... and "DCU" would be what credit union?
"Never underestimate one's capacity to overestimate one's abilities" - The Dunning-Kruger Effect

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Wiggums
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Re: I want to make my children millionaires.

Post by Wiggums » Sun Nov 24, 2019 9:53 am

BolderBoy wrote:
Sun Nov 24, 2019 9:37 am
Jack FFR1846 wrote:
Wed Nov 20, 2019 9:39 am
Look around at credit unions. I know mine (DCU) pays 6.17% on the first $1k in each member's primary savings account. If you're somewhere DCU serves, open an account for each kid.
... and "DCU" would be what credit union?
https://www.dcu.org/bank/savings/primary-savings.html

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abuss368
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Re: I want to make my children millionaires.

Post by abuss368 » Sun Nov 24, 2019 10:23 am

Remember one of the most important financial plannings aspects between weighing retirement vs. college:

One can finance college but they can’t finance retirement.
John C. Bogle - Two Fund Portfolio: Total Stock & Total Bond. "Simplicity is the master key to financial success."

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Wiggums
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Re: I want to make my children millionaires.

Post by Wiggums » Sun Nov 24, 2019 10:26 am

abuss368 wrote:
Sun Nov 24, 2019 10:23 am
Remember one of the most important financial plannings aspects between weighing retirement vs. college:

One can finance college but they can’t finance retirement.
And sometimes the kiddies are on the 5 year college plan too :-)

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abuss368
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Re: I want to make my children millionaires.

Post by abuss368 » Sun Nov 24, 2019 10:29 am

Wiggums wrote:
Sun Nov 24, 2019 10:26 am
abuss368 wrote:
Sun Nov 24, 2019 10:23 am
Remember one of the most important financial plannings aspects between weighing retirement vs. college:

One can finance college but they can’t finance retirement.
And sometimes the kiddies are on the 5 year college plan too :-)
Very true and can depend on the degree involved. For example, anyone who desires to become a CPA now needs much moe college credits where it may not be doable on a 4 year program. Not the accounting degree but rather if one plans to become certified.
John C. Bogle - Two Fund Portfolio: Total Stock & Total Bond. "Simplicity is the master key to financial success."

DesertDiva
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Re: I want to make my children millionaires.

Post by DesertDiva » Wed Nov 27, 2019 11:10 pm

Zach, here’s an article you might find useful in your situation:

https://www.cnbc.com/2019/11/27/redline ... -kids.html

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JPH
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Re: I want to make my children millionaires.

Post by JPH » Thu Nov 28, 2019 12:07 pm

You have set a good example. That's a great start.
While the moments do summersaults into eternity | Cling to their coattails and beg them to stay - Townes Van Zandt

boglebill
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Re: I want to make my children millionaires.

Post by boglebill » Mon Dec 02, 2019 10:46 am

Nate79 wrote:
Wed Nov 20, 2019 6:38 pm
boglebill wrote:
Wed Nov 20, 2019 9:51 am
They can have Roth IRAs! Do they do chores for allowance money? Simple and realistic... $10/week? Not absurd...

https://www.fidelity.com/retirement-ira/roth-ira-kids
Um, no they can't.
I should not have used the word "allowance." But remain steadfast that they can have Roth IRAs.

https://www.investopedia.com/articles/p ... -child.asp

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Nate79
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Re: I want to make my children millionaires.

Post by Nate79 » Mon Dec 02, 2019 11:39 am

boglebill wrote:
Mon Dec 02, 2019 10:46 am
Nate79 wrote:
Wed Nov 20, 2019 6:38 pm
boglebill wrote:
Wed Nov 20, 2019 9:51 am
They can have Roth IRAs! Do they do chores for allowance money? Simple and realistic... $10/week? Not absurd...

https://www.fidelity.com/retirement-ira/roth-ira-kids
Um, no they can't.
I should not have used the word "allowance." But remain steadfast that they can have Roth IRAs.

https://www.investopedia.com/articles/p ... -child.asp
Of course they can have Roth IRAs if they have earned income. But what you said as earned income, chores for allowance is strictly forbidden so not sure how you think you were even close to be correct as you link clearly points out.

boglebill
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Re: I want to make my children millionaires.

Post by boglebill » Mon Dec 02, 2019 8:43 pm

Nate79 wrote:
Mon Dec 02, 2019 11:39 am
boglebill wrote:
Mon Dec 02, 2019 10:46 am
Nate79 wrote:
Wed Nov 20, 2019 6:38 pm
boglebill wrote:
Wed Nov 20, 2019 9:51 am
They can have Roth IRAs! Do they do chores for allowance money? Simple and realistic... $10/week? Not absurd...

https://www.fidelity.com/retirement-ira/roth-ira-kids
Um, no they can't.
I should not have used the word "allowance." But remain steadfast that they can have Roth IRAs.

https://www.investopedia.com/articles/p ... -child.asp
Of course they can have Roth IRAs if they have earned income. But what you said as earned income, chores for allowance is strictly forbidden so not sure how you think you were even close to be correct as you link clearly points out.
Again, refraining from editing my hastily written original response, acknowledging the poor wording for now the second time, the ROTH IRA for Minors is a real option.

I'm not a CPA (clearly), but the term "common juvenile job" leaves plenty of room to figure out the mechanics.

siriusblack
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Re: I want to make my children millionaires.

Post by siriusblack » Mon Dec 02, 2019 8:59 pm

I read the book "smart money smart kids" last year, and started my kids on a system where they earn an age-appropriate amount each week by doing chores. (For example, my 6 year old earns $3 a week by picking up his room and cleaning the toilet once a week. My 13 year old does her own laundry, cleans the bathroom, etc. and earns $10 a week.) They have 3 jars labeled "spend", "save", "give" and they allocate the money to these jars. My oldest daughter recently saved up enough for a new iPhone, and now she is using her "save" jar so she can eventually buy a car (and I told her I would match her dollar for dollar on the car). She is starting to earn some money baby-sitting and dog-walking as well. Once she gets to a certain point, I plan to switch her from cash in a jar to some kind of investment app (maybe betterment or something like that). Seems like the kids are starting to get the message -- work hard, use your money wisely (including some spending and giving, along with saving/investing), and you'll eventually have quite a lot to show for it. I would recommend the book.

liz24
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Re: I want to make my children millionaires.

Post by liz24 » Tue Dec 03, 2019 2:51 am

I believe you can achieve your goal of making your children millionaires via Roth IRAs, in addition to utilizing the Roth IRA space/investment experience as a means of teaching them all about the world of investment. Their knowledge will grow, and they can branch out in the investment world from there. I speak from experience, as my father had me open a Roth IRA when I was only 17.

#1. As soon as your children have wages, open up Roth IRAs for each of them. This will likely require you being a co-signer on accounts with them because they will be under 18. Time is on their side in such a major way if you can do this when they are SO young. Teach them about what you are doing with them and for them, but regardless, do this whether they fully understand every last detail. As I indicated, my father did this for me when I was 17. I wasn't quite aware of all the concepts or the gravity of what he was doing at the time, but, critically, because my hard earned wages were going into my own Roth IRA, I was paying attention and learning about the growth of my money, the value of this tax shelter, and various options available to me each year for investment as I went along. My father and I often discussed which funds I should put my money in next each year. We discussed what was happening in the economy, sociological trends, etc. I researched where I wanted to put my money next through Vanguard's website. Because I had skin in the game, I paid attention, and I grew more and more interested in saving and investment.

#2. Get yourself ready to pay for the little or not so little things for your kids (e.g., movies, eating out, used car, etc.). I personally believe that allowing a teenager to save their money and purchase their own car, particularly at today's prices, is a total waste of money. It is a depreciating asset, and it is too heavy a burden on the child to save toward something that will not provide enough of a return (compare: car as an investment versus VOO in Roth IRA- where will that invested money be in 30+ years?). Get yourself financially strong enough to provide for their needs while they, year after year, put whatever they can- or the max- into their Roth space. That should be their focus, and you provide for the other things, to the greatest extent that you can. I'm not saying they should not have fun and spend their wages too. But plan to invest the majority of their wages into the Roth. They will be amazed at the growth, develop a sense of ownership and accomplishment, and be so grateful you did this for them, especially as things start to pick up speed in their 20's, 30's and beyond.

#3. Utilize the Roth IRA experience as a springboard to teach them all about other forms of investment. Then have them take action and branch out from there. They should become well-versed in all types of investment vehicles over the years (stocks, ETFs, mutual funds, traditional IRAs, annuities, etc.), and grasp the positives and negatives of each type, so they can navigate their financial lives and make choices appropriate to their changing circumstances throughout their lives. Be ready to guide them in the taxable world too.

I wish you all the best in developing a plan that works well for you and especially your children.

ddurrett896
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Re: I want to make my children millionaires.

Post by ddurrett896 » Tue Dec 03, 2019 8:46 am

PennyPinscher wrote:
Wed Nov 20, 2019 8:25 am
The main point of my post: I have two kids, 5 and 6. I want to start them an account now so they can have a head start on life and not have to scrape together pennies like I do.
With my kids, teaching them about saving is more important than loading an account with them. I match what my kids save in the bank and they know that money can't be touched until college.

CrazyCatLady
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Re: I want to make my children millionaires.

Post by CrazyCatLady » Tue Dec 03, 2019 9:16 am

siriusblack wrote:
Mon Dec 02, 2019 8:59 pm
I read the book "smart money smart kids" last year, and started my kids on a system where they earn an age-appropriate amount each week by doing chores. (For example, my 6 year old earns $3 a week by picking up his room and cleaning the toilet once a week. My 13 year old does her own laundry, cleans the bathroom, etc. and earns $10 a week.) They have 3 jars labeled "spend", "save", "give" and they allocate the money to these jars. My oldest daughter recently saved up enough for a new iPhone, and now she is using her "save" jar so she can eventually buy a car (and I told her I would match her dollar for dollar on the car). She is starting to earn some money baby-sitting and dog-walking as well. Once she gets to a certain point, I plan to switch her from cash in a jar to some kind of investment app (maybe betterment or something like that). Seems like the kids are starting to get the message -- work hard, use your money wisely (including some spending and giving, along with saving/investing), and you'll eventually have quite a lot to show for it. I would recommend the book.
My friend does something similar with her kids. Allowance and birthday/Christmas money is allocated 25% long term savings, 10% giving, 15% goal savings (i.e. iPhone) and 50% freely spendable. She also does a match ($.50 for every dollar) to long term savings. Once her daughter saw the long term savings grow, she started adding more of her 50% freely spendable money to long term savings to get the match. :) The hope is that they'll be so used to saving, they'll automatically do the same when they earn paychecks.

NotWhoYouThink
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Re: I want to make my children millionaires.

Post by NotWhoYouThink » Tue Dec 03, 2019 9:20 am

ddurrett896 wrote:
Tue Dec 03, 2019 8:46 am
PennyPinscher wrote:
Wed Nov 20, 2019 8:25 am
The main point of my post: I have two kids, 5 and 6. I want to start them an account now so they can have a head start on life and not have to scrape together pennies like I do.
With my kids, teaching them about saving is more important than loading an account with them. I match what my kids save in the bank and they know that money can't be touched until college.
How does not allowing them to spend teach them to save?

ddurrett896
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Re: I want to make my children millionaires.

Post by ddurrett896 » Wed Dec 04, 2019 3:07 pm

NotWhoYouThink wrote:
Tue Dec 03, 2019 9:20 am
ddurrett896 wrote:
Tue Dec 03, 2019 8:46 am
PennyPinscher wrote:
Wed Nov 20, 2019 8:25 am
The main point of my post: I have two kids, 5 and 6. I want to start them an account now so they can have a head start on life and not have to scrape together pennies like I do.
With my kids, teaching them about saving is more important than loading an account with them. I match what my kids save in the bank and they know that money can't be touched until college.
How does not allowing them to spend teach them to save?
I didn't say my kids aren't allowed to spend.

One of my kids recently received $70. She said she wanted to save $30 and spend $40. Make sense?

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