How I secured my kids' retirement.

[4legsgood]

For my DD I contributed to a Roth for her while she worked W-2 jobs during high school and college and it's grown into a nice chunk of change. I didn't require her to contribute, just me. In her friend group, not that many kids worked so it seemed a little too negative to ask her to put in some of her hard earned wages. I like to think it gives her some peace of mind, as well as, she's observed first hand how it grows if you leave it untouched - though she might be shocked if the market ever takes a dive!

[Time2]

Quote:

Originally Posted by Aerides I can understand the desire of a parent to ensure one's children are going to be ok financially. But if I knew at, say 27, that my retirement and financial future were secure, I am pretty sure I would not have done quite as well for myself.

$100,000 at 7% compound for 35 years with 3% inflation, doesn't quite reach the pinnacle of a financially secure future. If it reached the $1.2M in 35 years it will have a buying power of $426,466, to have the same buying power you will need $3,376,635.

The inflation calculator I used is,

https://www.buyupside.com/calculator...ationjan08.htm
The kids would be wise to continue investing in their future.

[VanWinkle]

Quote:

Originally Posted by travelover I invested my kid's money in Enron. He lives in a van by the river now.

[Davidhelp]

Invest in AMD. They make computer chips.
I own lots of the stock : ) It allowed me to recently retire.

AMD on Jan 1st for each year. It has almost double every year since 2018.

Jan 2018 $13.74
Jan 2019 $24.41
Jan 2020 $47
Jan 2021 $85.64
Current price 12-27-21 is $154.36

They are waiting on a merger to close hopefully this week and when it is approved the stock will go up and up.

The other option is when Starlink has a IPO then invest and watch the stock price go up like one of Elon Musk rockets. Starlink is a internet connection company. 2ft dish gets you internet anywhere in the world. He currently has approx 1,800 satellites in orbit and he said he needs many more and making a profit before going public.

[EastWest Gal]

My dad participated in his company stock purchase plan his entire 40 year career as an oil chemist. My mom used to complain about his frugality, but stopped after he retired. Hmm.

His investments helped fund my and my sister’s retirement.

I helped DS start a Roth IRA, matching the funds so he could keep his earnings. Then one of his part time jobs offered a Roth 401K. I helped him set up his portfolio within that. There is a self directed option. It is all equities, mostly VTI.

With a Roth 401K, there is no maximum percentage, just an annual limit. He’s putting about 40% of his paycheck in the Roth 401K.

In 2021, I gifted him equities in an after-tax account. They were DFA funds. He then sold them and bought VTI. He’ll pay zero tax on the capital gains and his basis is now set at current value. It’s kind of a stepped up basis.

The cool thing about gifting investments is that he sees it as untouchable money, as I did. That is, until I retired. Yet it is available to him should he need it.

[The Cosmic Avenger]

Quote:

Originally Posted by Aerides I can understand the desire of a parent to ensure one's children are going to be ok financially. But if I knew at, say 27, that my retirement and financial future were secure, I am pretty sure I would not have done quite as well for myself.

As Time2 said, it's probably not as impressive as it sounds, although it's still a leg up. But I agree with you, Aerides, which is why we are only matching W-2 income to contribute to a Roth IRA, which is all in an S&P index fund (although as a college sophomore, the "kid" is finally showing an interest in the specifics, so I might turn it over soon). And setting them up to graduate without debt, so they can keep saving rather than starting out in the hole.

[VanWinkle]

Quote:

Originally Posted by Davidhelp Invest in AMD. They make computer chips. I own lots of the stock : ) It allowed me to recently retire. AMD on Jan 1st for each year. It has almost double every year since 2018. Jan 2018 $13.74 Jan 2019 $24.41 Jan 2020 $47 Jan 2021 $85.64 Current price 12-27-21 is $154.36 They are waiting on a merger to close hopefully this week and when it is approved the stock will go up and up. The other option is when Starlink has a IPO then invest and watch the stock price go up like one of Elon Musk rockets. Starlink is a internet connection company. 2ft dish gets you internet anywhere in the world. He currently has approx 1,800 satellites in orbit and he said he needs many more and making a profit before going public.

Congrats on your stock pick!!! I hope it continues to serve you well....

VW

[OldShooter]

Maybe it's just me, but I would not use the word "secure" in connection with what I understand to be a 100% Tesla position.

[Deuce]

Quote:

Originally Posted by target2019 And then Tesla gets serious competition. Or a serious business blunder results in company takedown. Or...

Debbie downer.

[kgtest]

The power of compounding is an incredible thing. I plan to get my kids on the payroll ASAP and contribute to their Roth IRAs. I liked it better when you could stretch the IRA, its become less powerful, but still a powerful vessel. I am always debating if I should do Broker vs Roth for the kids, knowing they might need the money sooner in their lives with the Roth limiting access to at the earliest 55. I think a combination of both is probably ideal. I should have bought TSLA but alas I did not. Had a buddy drop his 100k severance into it and became a retired millionaire at 38...off a single stock. Makes me not want to go to work on Monday but I'll forge forth lmao.

[WhenIsItTime]

Quote:

Originally Posted by 38Chevy454 Good timing on the TSLA investment choice. But the real point of your post is the power of compounding. That is the magic that turns a modest amount when young into big money for retirement.

My kids are <15 years old. Their college accounts already comprise 1/3 return (50% gain on investment). The last few years may have even grown faster than the respective college inflation

[kgtest]

The biggest risk to TSLA is Musk dying. That opinion is worth what you paid for it. Even JFK could not be saved by miracles and that fate could be the same to everyone in this forum and beyond.

[SecondCor521]

Quote:

Originally Posted by WhenIsItTime My kids are <15 years old. Their college accounts already comprise 1/3 return (50% gain on investment). The last few years may have even grown faster than the respective college inflation

College inflation has actually been pretty tame over the last five years or so, at least based on the College Board statistics I follow.

Historically they have grown at about 6%, so I plugged that into my college expenses spreadsheet estimates. Every year I'd plug in the new statistics and recalculate where I was, and pretty much every year over the past five years I've gained ground because the costs have gone up less quickly.

(I look at in-state public 4-year universities' tuition, room, board, and fees as my proxy for what "a year of college" costs. Now that both my kids are in college, I use their actual semester bills instead of the generic College Board numbers.)

[hotwired]

I'm self employed and hired our daughter early on, at age 11 and she's 20 and has mid five figures in a ROTH now. Doesn't need to put another dime in if she wants to retire at 65 (but she WILL put more dimes in!)

[hotwired]

I'm self employed and hired our daughter early on, at age 11 and she's 20 and has mid five figures in a ROTH now. Doesn't need to put another dime in if she wants to retire at 65 (but she WILL put more dimes in!)

[Months.in.Wyoming]

Quote:

Originally Posted by Tesla boomer When my son was 18, he got his job. I know way late. We didn't know what we were doing as parents. I tell every parent of young children to start your kids earning money around the house as soon as you can and have them work outside of the house for someone else by at least age 16. Anyway, I had caught on to the power of the Roth IRA brokerage at that time and I told him that whatever money he made at his job, I would match it (up to the Roth annual contribution limit) and we would open up a Roth IRA brokerage and transfer the money into that brokerage and if he wasn't interested in learning about investing at that time, I would just invest it for him. I ended up investing it in $TSLA. A year later, I did the same thing with my daughter. Over the last 4 years I have contributed $19k to my daughter's Roth. About a month ago, her Roth IRA brokerage value was $100k. With a conservative rate of return of 7% in 35 years when she is my age, she will have $1.2M. And that assumes she never decides to contribute to it herself.

Did the same and they have learned at different speeds how to keep that machine rolling - the time value is so important we should use it - now think what’s possible with grandkids!!!

[kannon]

This is a great financial lesson - thanks. We started our kid's Roth IRAs when they started baby sitting and snow shoveling and any other forms of business. We matched their Roth input and they saved that for college. Now in their 30s they will both be millionaires in a few years. Great lesson. Suggest every current or planned parent review Roth IRAs.