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DrXX said:   lray said:   Sell it.Don't sell. Buy puts.Selling call options would be much more prudent, but he'd need to wait a few years.

So, I have a serious answer. Drop 5k in an investment account. Add 5k per year or about $400/month. Invest in a broad based ETF and get market returns of 8% per year. When the kid is 40, they will have about 1.5M or 450k in current dollars, assuming 3% inflation. Put it in a trust and don't tell her about it until she is 30

UGMA would cover it for the first 18 years so the transfers are tax free. Nice way to have perpetual wealth and as long as you turn her into a FWer, it should stay that way.

Child actor. They tend to turn out well.

codename47 said:   get market returns of 8% per year

Thanks, Mr. Madoff, where do I sign?

jeffjones30 said:   akoscho(she was 2 lb 1 oz)

Nothing to contribute except: good luck with her! I wish you, your family, and your new baby all the best and I hope she gets all the care she needs. Not to be a d-bag, but I know a couple who had a premature baby and it was hellish for them. On the plus side, everything worked out perfectly and now their son is an amazing little toddler. Again, good luck!

Pitpirate, do you think market returns of 8% over 40 years is unreasonable? Mr. Madoff, really?

codename47 said:   Pitpirate, do you think market returns of 8% over 40 years is unreasonable? Mr. Madoff, really?

All you need to say is "How many 40 year period in US history where returns have been less than 7% annually?".

Disclaimer: blah blah blah historical returns blah blah blah

You could probably maximize by selling the baby. Then you would save on the expenses too. Like a BOGO offer.

seekay44 said:   jeffjones30 said:   I know some banks give higher intrest for childrens saving accounts. But how young do they start? Which are the ones with highest rates and highest maximum account balance?
First, congratulations!

Next, try http://www.depositaccounts.com/savings/childrens-savings-account...

But IMO, the difference may not be worth it. I thought of the same when my daughter was born, and went with a 529 instead.
In the meantime, revel in your 'new dad' status, have fun, and enjoy her company.


I have been doing a 529 for a year, our baby is on the way soon. I think a 529 is the way go, even if your kid never burns the college money and becomes a burnout, you would've made well more than the withdrawal penalty if you are forced to yank it.. or just give it to your grandchildren and let it mutate for 30 more years.

trekwars2000 said:   jeffjones30 said:   Thanks to all so far
Though 529 is not fluid and needs $3k down.
Both me and wife are 780+ credit scores so really hoping she will learn the right way as she grows older.

Seekay44 your right looking at most of those rates it dosnt seem worth it.


529 doesn't need 3K to start. You can use the Iowa 529 plan and start for as low as $25.


Correct, I live MN but I have an Iowa 529 plan... started with a $100/mo automatic withdrawal.

Honey Boo Boo makes a lot of money.

I give appreciated stock to my children. Every year they sell enough to get enough capital gains (and dividends) to get them to the kiddie tax threshold ($1900 of profit in 2012). They pay little or no tax.

The caveat is that once you give the stock to your child it belongs to them. You cannot use it for anything you want, you have to use it for their benefit. This is not hard to do as you will find out, whether it is child care, clothes, vacations, camp, etc.

You'll have to file a tax return each year.

tarcapone said:   I give appreciated stock to my children. Every year they sell enough to get enough capital gains (and dividends) to get them to the kiddie tax threshold ($1900 of profit in 2012). They pay little or no tax.

The caveat is that once you give the stock to your child it belongs to them. You cannot use it for anything you want, you have to use it for their benefit. This is not hard to do as you will find out, whether it is child care, clothes, vacations, camp, etc.

You'll have to file a tax return each year.


Now we're cooking with gas. Here's a way to get tax discounts on stuff you would have bought for the kids anyways. It doesn't matter to you if you use appreciated assets instead of cash. Good contribution.

codename47 said:   So, I have a serious answer. Drop 5k in an investment account. Add 5k per year or about $400/month. Invest in a broad based ETF and get market returns of 8% per year. When the kid is 40, they will have about 1.5M or 450k in current dollars, assuming 3% inflation. Put it in a trust and don't tell her about it until she is 30

UGMA would cover it for the first 18 years so the transfers are tax free. Nice way to have perpetual wealth and as long as you turn her into a FWer, it should stay that way.


Why not nest this in a parents Roth or and 401k retirement account to shield from financial aid consideration and have total control of the funds while they earn tax efficiently. You can always add them as a benificary to the trust later in life.

stanolshefski said:   DadofPoohs said:   Start a Roth IRA.

She needs earned income.

Modeling fees! Presumably the baby is cute enough to get on the brochure of your small business.

Reading the original post made my eyes bleed.

tarcapone said:   I give appreciated stock to my children. Every year they sell enough to get enough capital gains (and dividends) to get them to the kiddie tax threshold ($1900 of profit in 2012). They pay little or no tax.
.


This is a great idea. If one does not have any appreciated stock, could they take two opposite sides in a "investment bet"(one bet will win, other will lose), then the winning bet will be an appreciated asset that can be given to the child, and the losing bet can be taken as a capital loss? If so, anyone know a simple way to do this "investment bet", such that one side of the bet is guaranteed to double, and the other side is guaranteed to go to 0?

jeffjones30 said:    I knew some might take it the wrong way. But in a place where people do crazy things to save/ make every penny it would be more welcomed.
To the people who think all premies are in biohazard type lockdown is untrue.
After a 3 min scrub down and lots of antibacterial wash we have been able to hold her since week 1.
Intact today she was moved into an open air crib. Me and wife go feed , give her baths, change her, give her vitamins, and read to her.
So yes I love and carish her as much as any other dad would.


Just wanted to say congrats. We just adopted a baby who was in the NICU, she was there for 10 weeks. We were there since day 1, 8-12 hours a day and I know how tough it can be. She is currently 7 months old and could not be doing any better, perfectly healthly. Hope everything turns the same for you!

There will be those here that will disagree with me from an investment growth perspective (and those that will agree with me from a financial security perspective), but when she is 6 months old take out a 100k children's whole life policy with paid-up additions from SBLI. And when she is old enough to really understand and appreciate, maybe at age 30 or so, transfer the ownership to her.

Just an update for those that care. Baby is doing great might get to go home in 10 days after 8 1/2 weeks in. As of now all money if just in a saving account making like .05%, will revisit the 529 and other things once she is home.

jeffjones30 said:   Just an update for those that care. Baby is doing great might get to go home in 10 days after 8 1/2 weeks in. As of now all money if just in a saving account making like .05%, will revisit the 529 and other things once she is home.

Why keep money earning a measly .05% when you can use American Express online high yield savings and make 0.90% (14 times what you are getting with your .05% rate account).

why get a half a grain of rice when you could have fourteen grains of rice!
there's a
point where percentages mean nothing and margin its the only consideration.

DadofPoohs said:   This is FWF. Figuring out a way for a baby to have earned income is pretty far down on the list of creative solutions to problems that I've seen on this forum.

I have a friend who ran a small newsletter type magazine as a business. They hired their baby as a model with a banner (it ran in their newsletter). I guess it was earned income.

PFDigest said:   Custodial account-opening bonuses at Sharebuilder. We made $75 each during a promotion last year.

Note. They allow only one per social security number account and prevent you from getting later offers if you take such a one now. You may want to look for a offer with more cash (see the thread on their offers). I believe some of their current offers for more money (say $200) may be wiser, depending on how much you have to invest, even if you need to wait a bit to have enough capital.

I like the Merril Lynch offer of a 450 bonus for a 529 plan funded with $5,000 for three months. After you get the $50 bonus in it, you may keep it there, or plan on eventually rolling it over in pieces or whole to where you live, if that states gives you an income tax benefit for contributions. There is still time to collect the bonus and then get it to your home state in time for this year's tax.

As pointed out, setting up one or more 529 plans often makes sense. Incidentally,if you put the money in a plan invested in stocks,and the market crashes you can get a tax deduction in certain cases. If the market does well, you can avoid taxes by keeping the plan until the funds can be withdrawn tax free for educational expenses. The same may work for Coverdell plans, but I know less of them.

You should also look at the Grad Save thread for ideas (search under 529 or go to
http://www.fatwallet.com/forums/finance/1250495/m17536710&lastpa...

There appear to be a lot of $50 certificates people have not been able to use on their own children that can probably be bought at a discount and used once. They probably still have their $100 offer open for throwing a party and getting a $1000 in contributions from at least 10 different people, although with the fees they charge, I doubt if it is worth begging contributions to be made through their plan. Donations can be made directly to you without their fees.

seekay44 said:   

I have been doing a 529 for a year, our baby is on the way soon. I think a 529 is the way go, even if your kid never burns the college money and becomes a burnout, you would've made well more than the withdrawal penalty if you are forced to yank it.. or just give it to your grandchildren and let it mutate for 30 more years.


While I don't suggest 529 plan as an investment for other than college, they are more suitable for emergency reserves than you might think. In a long term period of low income (think losing a job or being disabled or killed), you are likely to be in a low bracket and the 10% tax on the increase in value may not be too bad. You invest say $10,000 and when it has grown to $12,000 you have to make a non-qualifie3d withdrawal. The increase in value is $2,000 which means a $200 tax plus whatever is taxed at your normal income tax rate. This could very well be zero if you have three exemptions (you, wife, child) and qualify for the $1,000 child credit, you could have a moderate income in that year (say from unemployment compensation and a few other sources) and pay no income tax that year. Losing $200 to get access to $12,000 in an emergency may be acceptable.

Also notice that you are most likely to lose your job, or have a bad business year during a recession. If you are in stocks, a 20% value decline certainly possible, and in that case there is no tax penalty to withdrawing the money (and probably a tax benefit).

It is a little uncomfortable to think this way, but when we had a baby there seemed to be lots of unsolicited offers for life insurance, typically without physical exams or health questions. I presumed the terms were unfavorable, and taking insurance on a baby (as distinct from on the parents) does not seem to reduce risk.

However,if the child is in bad health, placing a bet may make financial sense, even if not emotional sense.

Put the baby to work. The trail of deadbeats ends here!

tarcapone said:   I give appreciated stock to my children. Every year they sell enough to get enough capital gains (and dividends) to get them to the kiddie tax threshold ($1900 of profit in 2012). They pay little or no tax.

The caveat is that once you give the stock to your child it belongs to them. You cannot use it for anything you want, you have to use it for their benefit. This is not hard to do as you will find out, whether it is child care, clothes, vacations, camp, etc.

You'll have to file a tax return each year.

I like this idea. Can you please give more details, or make a new thread? All the results I'm finding are about donating appreciated stock to charities. I'm wondering if a brokerage account needs to be opened in the kids name etc.

ProfessorEd said:   It is a little uncomfortable to think this way, but when we had a baby there seemed to be lots of unsolicited offers for life insurance, typically without physical exams or health questions. I presumed the terms were unfavorable, and taking insurance on a baby (as distinct from on the parents) does not seem to reduce risk.

However,if the child is in bad health, placing a bet may make financial sense, even if not emotional sense.


Baby is in great heatlh just small 4 lb 9oz now. Clean eye exam, normal liver and kidney funtion, she normally scores 3-4 weeks ahead on her assestments. Thinking we will be out of NICU and back home in 1 week.

Cliff, do you have specific questions? If you own stock that is certificated or in book-entry, you would change title with the Transfer Agent. If you own stock in street-name (within a brokerage account) your child will open another brokerage account, and you will request that your broker journal (transfer) the securities from your account to his/hers. Then, you give your tax-return preparer all the details so that he can fill in IRS Form 709 to document the gift.

jeffjones30 said:   ProfessorEd said:   It is a little uncomfortable to think this way, but when we had a baby there seemed to be lots of unsolicited offers for life insurance, typically without physical exams or health questions. I presumed the terms were unfavorable, and taking insurance on a baby (as distinct from on the parents) does not seem to reduce risk.

However,if the child is in bad health, placing a bet may make financial sense, even if not emotional sense.


Baby is in great heatlh just small 4 lb 9oz now. Clean eye exam, normal liver and kidney funtion, she normally scores 3-4 weeks ahead on her assestments. Thinking we will be out of NICU and back home in 1 week.

OP, I have no financial advice, other than relaying something one of my favorite radio hosts said when asked how much money it costs to raise a child. He said, "All of it." Doesn't matter if you make $20k or $200k.

As the parent of a healthy toddler who also came into the world early and skinny, I hope that your daughter is home with Mom and Dad or will be very soon.

ProfessorEd said:   I like the Merril Lynch offer of a 450 bonus for a 529 plan funded with $5,000 for three months. After you get the $50 bonus in it, you may keep it there, or plan on eventually rolling it over in pieces or whole to where you live, if that states gives you an income tax benefit for contributions. There is still time to collect the bonus and then get it to your home state in time for this year's tax.

As pointed out, setting up one or more 529 plans often makes sense. Incidentally,if you put the money in a plan invested in stocks,and the market crashes you can get a tax deduction in certain cases. If the market does well, you can avoid taxes by keeping the plan until the funds can be withdrawn tax free for educational expenses. The same may work for Coverdell plans, but I know less of them.

You should also look at the Grad Save thread for ideas (search under 529 or go to
http://www.fatwallet.com/forums/finance/1250495/m17536710&lastpa...

There appear to be a lot of $50 certificates people have not been able to use on their own children that can probably be bought at a discount and used once. They probably still have their $100 offer open for throwing a party and getting a $1000 in contributions from at least 10 different people, although with the fees they charge, I doubt if it is worth begging contributions to be made through their plan. Donations can be made directly to you without their fees.



Hi - Where can I find this 450 bonus promo with the 529 plan at Merrill? Searched the ML website and only found a $50 bonus promo. Thanks!!

Pretty sure the 450 was a typo of $50. (shift+4 then 50)

I used to work with a private adoption agency, and many of them will pay big money to prospective mothers to cover costs related to a healthy birth. (Some would classify a cell phone, rent, or even a car as necessary expenses.) But the agencies often got burned when the mom refused to sign over rights after the birth.

Some women would shop several agencies, and get several to reimburse the same expense.

billkong said:   Pretty sure the 450 was a typo of $50. (shift+4 then 50)

*knocking self on forehead*

Didn't even consider typo..Thanks!

beanie4me said:   I used to work with a private adoption agency, and many of them will pay big money to prospective mothers to cover costs related to a healthy birth. (Some would classify a cell phone, rent, or even a car as necessary expenses.) But the agencies often got burned when the mom refused to sign over rights after the birth.

Some women would shop several agencies, and get several to reimburse the same expense.


Very few agencies get burned, it is the adoptive parents. Usually they have already matched them and forced them to pay the birth mother expenses. These are not reimbursed when she changes her mind.

It is sad but adoption has almost become human trafficking. The cost of a private adoption via an agency is easily $40k-$50k now.

Here's a good youth deposit account deal:

https://www.jfcu.org/youth_GrowWithMe.asp

4.50% APY for the first 12 months with an opening deposit of $500 - $10,000.

After the first year, the interest rate becomes variable: Federal Funds Rate + 1%. You can add up to $1,000 in depositts to the account each subsequent year. On the child's 18th birthday, the account converts to a Student Rewards Checking Account. Although the $1,000 deposit cap on subsequent years is very limiting, starting off with $10K at 4.5% APY is a great start, and the Federal Funds Rate will eventually rise.

Justice FCU Eligibility: https://www.jfcu.org/joinUs_Eligibility.asp#lea

I joined via the National Sherrifs' Association; my wife through the National Native American Law Enforcement Association. You will probably need to provide a copy of your membership card from either organization as proof of eligibility. Just a receipt has been insufficient in the past. Customer service has been a pain when joining the CU; one can only hope they've improved. Once I was a member, customer service was very good.

ETA: You need to keep the account open until the child's 18th birthday; otherwise all the interest will get forfeited.



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