CHILDREN'S INVESTMENTS

1. You don't have to be wealthy
2. Can begin before they are born
3. Get your child a Social Security number/Social Insurance number
4. Help family wealth building
5. Can reduce taxes

1. You don't have to be wealthy.

Children's investments do not require great wealth because you can start with a dollar a day and upon the 250th day, you can send a check to Pax World Fund to open an account for your youngster. If you continue saving a dollar a day, sending a check for $50 each seven weeks to Pax World Fund, in ten years you have $12,000 not counting taxes. Individual stocks can have tax benefits even for the kids as I discuss elsewhere on this site.
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2. Kids' money can grow before they are born.

You can set up a trust for your children, including unborn children. Most any lawyer can do this for about $150 dollars if your state laws are not cumbersome. I have found that it is very important to both ask around and to shop around for the best buy in legal work on setting up children or family trusts. They are rarely as complicated as some attorneys might make it seem. In fact they can be created from inexpensive software available, but I recommend a face to face meeting with your attorney on such matters.
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3. Children's investments can begin as soon as they have a Social Security number/Social Insurance Number SSN/SIN.

Birthing centers and maternity hospitals today have the paperwork to get a SSN and usually by six weeks your newborn can have one. Pax Growth Fund with a $500 minimum to open is a good start. Let relatives know that you want a check for the baby to add to such a fund. Don't forget to send hand made certificate to each donor as that can encourage their future participation in your child's wealth building.
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4. Family wealth building

Family wealth building is not that difficult, even though tax laws change regularly. Placing assets in trust for minors (Uniform Gift to Minors Law in your state) is simple. When my wife collected the "baby gift" checks from relatives, I suggested that she give that value of her Pax World shares to our baby in a new account. Instead of us paying a tax on my wife's shares, the baby received the shares at $19.50 a share (My wife had paid about $13 for those shares). Most mutual fund companies just have a box you check and with the child's social security number and date of birth on the form. You can let your kids help save for that vacation trip to Disney or whatever. And for college bound youngsters, Educational IRAs that start January of 1998 can't be beat.
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5. Reducing Taxes

Children offer major tax advantages because at certain ages they are taxed less than working parents. Also, they are allowed $650 of gains or dividends before taxes at any age, and it gets better when they're 14. Hypothetically, a family of four with $100,000 of stocks held equally in the name of each member would pay no tax with average 2% dividend for that family portfolio. It is best to have the grownups first own stocks and then "gift" to minors those stocks that have appreciated a lot when you are ready for them to have their individual accounts. You can set up a trust for your children, including unborn children. Consult your tax advisor to get it just right.
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