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Another Young Dreamer
Old 06-07-2014, 08:46 PM   #1
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Another Young Dreamer

My son turned 18 three days ago. Today I explained the difference between taxable, tax deferred, and tax free accounts. We setup a brokerage account for him and a Roth IRA account. No need for an IRA at this point.

He's been working and saving money. To help him get started I matched what he moved into his brokerage account from his checking and would contribute the same amount to get his Roth IRA started.

He now has $3,000 in a brokerage account and $1,500 in a Roth IRA.
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Old 06-08-2014, 06:52 AM   #2
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Quote:
Originally Posted by aim-high View Post
My son turned 18 three days ago. Today I explained the difference between taxable, tax deferred, and tax free accounts. We setup a brokerage account for him and a Roth IRA account. No need for an IRA at this point.

He's been working and saving money. To help him get started I matched what he moved into his brokerage account from his checking and would contribute the same amount to get his Roth IRA started.

He now has $3,000 in a brokerage account and $1,500 in a Roth IRA.
You are a great parent. We need more parents to do this. You got to get the kids involved early so they get a feel for this.

My dad set my sister and I up with a stock at age 10! It was part mom and dad's money, part mine that I saved. I remember the total was $300 in stock. I used to graph the price along with the DJIA. Sadly, my graph was distressing. (I remember graphing 600 on the DJIA.) Never the less, dad said I should stick with it and eventually it went up, along with the stock. I learned A LOT through this.

Secondly, during my late teens, the IRA just started. Mom and Dad also had me set up an IRA, believe it or not. Put $250 of my savings in a long term CD during those go-go rate periods. Another wise move, which of course I slowly started adding to after I got a real job. (My primary savings at my real job was a 401k.)

The IRA seemed crazy at the time, but it kept me thinking about long term horizons. I hope your son gains the same insight.
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Old 06-08-2014, 07:06 AM   #3
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This is a great way to get your children in the right frame of mind about saving, investing, reducing taxes and generally thinking about personal finance. We started our boys off in a similar way in their a few years ago.
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Old 06-11-2014, 03:59 PM   #4
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Just show him that $3,000 today at 18, will become approx $65,000 at 58, with an 8% annual rate of return. Or at 48 it is approx $30,000. That is the value of compounding, and why investing now at such a young age is so beneficial.

Also, good for you helping him to get started and lead by example.
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Old 06-11-2014, 08:13 PM   #5
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Thanks dad! Can I have the car keys?
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Old 06-12-2014, 04:04 PM   #6
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Neither of my parents ever had a conversation with me about a 401k or Roth IRA and I'm 31 yrs old. The early years make a huge difference. Kudos to you sir.
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