DW and I are expecting our first child sometime in June. It's happening rather late in life for us, but no complaints--at least now I have no worries about us being able to afford it.
I'd like to bounce some ideas off the forum. First, for college, I'm thinking we'll do the Ohio 529. I was thinking of opening it with the max annual lump sum allowed by gift tax law (26K combined from both of us, I believe). In subsequent years we'll likely contribute $300 a month or so, and hope for 5% appreciation a year. That should bring us pretty close to the max allowed in these accounts, particularly if the grandparents chip in occasionally. I plan on doing the aggressive age allocation strategy (heavy in equities at first, moving more to cash/bonds as the time for matriculation draws nearer). All equity investments would be index funds.
My other idea is to create a separate "lifestarter" fund. I'm thinking for this I'll try to start it at 5-10K when the baby is born and put in at least $1500 per year until the child reaches 25. (Again, hopefully the grandparents would contribute too). This would consist of a US total market index and probably an emerging markets index. Why 25? Because we'll have college covered with the 529, and this would be a nice gesture for the anticipated start in life upon graduation--could be used for grad/professional school, down-payment on a home, or hopefully, just continued savings.
Are these good ideas? Would another arrangement be better? For my second idea, what type of vehicle offers the best return and lesser tax burden? I'm considering a trust of some kind. I'll certainly be consulting with a tax/estate attorney as the time draws near, but would like to engage the experience of the forum.
Sorry for the length of this post, and thanks/congratulations for reading this far!
I'd like to bounce some ideas off the forum. First, for college, I'm thinking we'll do the Ohio 529. I was thinking of opening it with the max annual lump sum allowed by gift tax law (26K combined from both of us, I believe). In subsequent years we'll likely contribute $300 a month or so, and hope for 5% appreciation a year. That should bring us pretty close to the max allowed in these accounts, particularly if the grandparents chip in occasionally. I plan on doing the aggressive age allocation strategy (heavy in equities at first, moving more to cash/bonds as the time for matriculation draws nearer). All equity investments would be index funds.
My other idea is to create a separate "lifestarter" fund. I'm thinking for this I'll try to start it at 5-10K when the baby is born and put in at least $1500 per year until the child reaches 25. (Again, hopefully the grandparents would contribute too). This would consist of a US total market index and probably an emerging markets index. Why 25? Because we'll have college covered with the 529, and this would be a nice gesture for the anticipated start in life upon graduation--could be used for grad/professional school, down-payment on a home, or hopefully, just continued savings.
Are these good ideas? Would another arrangement be better? For my second idea, what type of vehicle offers the best return and lesser tax burden? I'm considering a trust of some kind. I'll certainly be consulting with a tax/estate attorney as the time draws near, but would like to engage the experience of the forum.
Sorry for the length of this post, and thanks/congratulations for reading this far!