SHARE THE VALUE OF INVESTING
When it comes to investing, education and experience are key. This is not something that is taught in school, but instead must be learned either on one’s own, or from a mentor figure. Once you learn the ins and outs of investing, you can use a self-directed IRA to pass along your knowledge to your children.
SET YOUR CHILDREN UP FOR SUCCESS
- Investing and saving are difficult concepts for children to grasp
- Starting early allows more time for the money to grow
- Parents have control over the account until the child is 18 years old
- Teaching with a self-directed account provides financial lessons in a practical, measurable way
CONTROL AND FINANCIAL DISCIPLINE
Long term financial planning is a skill that needs to be learned and practiced. There are many ways to make the wrong investment or act too quickly when a seemingly “good deal” presents itself. By having control of the account you can ensure investments are vetted and thought out.
WORK ETHIC
• Contributions must be earned income by the child
• Roth accounts lead to beneficial tax opportunities
• The child’s level of effort determines the size and success of the account
A self-directed Roth account with the maximum annual contribution of $6000 with a modest rate of return of 8% grows to over
$240,000 after 18 years.
FREQUENTLY ASKED QUESTIONS:
1. How do I add funds to an account like this?
Any funds contributed to the account must be earned by the child. Examples include modeling, promotional work, or other tasks for a business.
2. Should I open a traditional IRA or a ROTH?
Roth IRAs work especially well for minor accounts. Children will often have low income and therefore pay little or no income tax.
A low tax burden means more money to invest with.
3. Why wouldn’t I just use a mutual fund?
Self-directed accounts are hands on. They provide more freedom and opportunities to pass on real life knowledge, rather than letting someone else make stock picks for the account. With self-direction you are free to invest in things you have knowledge in, and pass that to your children.
4. How do I make the investments?
As the trustee of the minor’s account, you control all the investment choices. You simply provide NuView IRA with the direction, and the investment is made on behalf of the minor’s account.
