jcboy
 
Reply Sat 14 Dec, 2013 09:11 am
A couple of months ago I opened an online ETrade account for Antonio, he’ll be 8 in February, the account is actually in my name because you must be of legal age but he thinks its his. Hey you’re never too young to start a retirement account. He had an ING account but he wanted to close it because he said the account wasn’t making enough interest.

Everyday he logs into this account to check the balance. He said this morning the account has only made $1.23 since it opened so he needs to find the right mutual funds to invest in. Any suggestions?
 
Ragman
 
  3  
Reply Sat 14 Dec, 2013 11:47 am
@jcboy,
For small amounts, savings account from banks don't earn much at all (0.15 to 0.25%). CD (Certificates of Deposit) of various lengths can earn around that in 3, 6 month (0.3 to 0.6% ) or 1-yr (0.95%) -maturity timeframes.

Try checking our Forbes.com for surveys of rate of return % info:

http://www.forbes.com/sites/moneybuilder/2013/01/11/online-banks-offer-best-savings-account-rates-for-2013/

"Capital One Bank. Capital One Bank is a big bank with nearly 1,000 branches across nine states, and more than $100 billion in deposits. In addition, it should have a beefed-up online presence soon because of its recent acquisition of ING Direct. For branch-based customers, Capital One Bank offered an average savings account rate of 0.68% (based on rates in New York — rates offered may differ by location)."
0 Replies
 
JPB
 
  3  
Reply Sat 14 Dec, 2013 12:30 pm
He's got at least 10 years before he's looking to draw from his investments (for college, say) and can therefore go with higher risk funds. Look for funds classified as growth vs value or income. There's a greater risk for losses with such funds too so he'll need to be prepared for dips. A good rule of thumb to follow is 80-20 split between growth stocks and income producing bonds when you have more than 10 years to ride out a dip in the market, 50-50 when you're between 5-10 years outs, and 20-80 when you think you'll need the funds within 5 years.

If he gets a 529 plan his earning will accumulate tax-free (and state tax free in some states) if he uses the funds for college expenses.

Here's one article on the subject.
http://www.moneycrashers.com/investing-long-term-investment-strategy-allocation-age/

Also, if he's really into it, a subscription to Money magazine might be a good gift. They have basic articles and simple investment strategies for the novice investor.
JPB
 
  3  
Reply Sat 14 Dec, 2013 01:15 pm
@JPB,
Another idea for a young investor is DRIP funds. You buy a few shares of stock directly from the company and then buy more shares by reinvesting the dividends or sending more money. My kids had McDonald's DRIPs when they were young.

http://www.fool.com/DRIPPort/HowToInvestDRIPs.htm
0 Replies
 
jcboy
 
  1  
Reply Sat 14 Dec, 2013 06:38 pm
Thank you both for the advice. I actually only put 500.00 bucks in that ETrade account because Antonio seemed so interested in how the stock market and mutual funds work so I thought I’d let him play with it. He watches it like a hawk!

I did open two 60 month CD’s through Chase Bank for his college fund, once they mature I’ll probably open two more for another five years so it’s there for his college tuition.

I’ll bet he would love the idea of a subscription to Money magazine, and he’s not even Jewish. Smile
Ragman
 
  2  
Reply Sat 14 Dec, 2013 07:12 pm
@jcboy,
Oy~! It is his pores now.

Interest can easily turn into knowledge and awareness, which is never a bad thing at any age.
0 Replies
 
 

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