January 14, 2008 • June Walbert
Q: I am looking for a start-up investment for my two
stepsons, ages 15 and 19. I would prefer something that would only
require a small investment to get started. Do you have any suggestions?
Thanks!
- Gwynn, Frantown, CO
A: I'm standing and applauding as I type. Great idea! Your stepsons are
lucky to have a stepmother like you. If we all did that for our
children, the world would be a more financially healthy place.
Hopefully, you are able to spark the kids' interest and start them down
a path of superb savings habits! Most mutual funds require a hefty sum
($1,000 or more) to establish a position in the fund, and then you can
choose to make monthly investments. But there are some mutual fund
companies that allow you to get started with no initial investment and
as little as $20 per month. So you might want to check that out.
There is another option to consider if your stepsons have earned income.
You may be able to set up a mutual fund investment inside a Roth IRA
for each of them (by the way, you can only contribute up to the amount
of income they report to the IRS). This would give them a great head
start on saving for retirement. However, keep in mind that Roth
contributions are meant for the long term, as earnings accumulated in
Roth accounts cannot be taken out without penalty until the age of 59
and a half.
I would encourage you to set up the accounts and get the boys
involved in the process! You'll teach them a great lesson at an early
age.
The preceding discussion is not tax, legal or estate planning
advice and is specific to the Gwynn's situation only. Consult with your tax,
legal or estate planning professional regarding your specific situation.
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