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We have bank accounts for our kids, currently earning 1.75% because we aren't depositing money every month. If money is deposited it's another 3.3%. I really n

We have bank accounts for our kids, currently earning 1.75% because we aren't depositing money every month. If money is deposited it's another 3.3%. I really need to get around to setting up Vanguard for them. Thanks for the reminder!

nsvd2 3mo ago
1.75 is less than the money is losing value from inflation. If that savings is in USD it's quite a bit less than inflation over the past five years.
samudrijan 3mo ago
Look into a 529 college savings plan.
hiddencost 3mo ago
VTSAX, ASAP. Inflation is usually estimated at 3% + annually over a long enough time horizon. You're losing money.
Cider9986 3mo ago
You need to put them in a custodial brokerage account or whatever allows you to buy ETFs for them (not sure of best tax advantaged account for non-working kids) and buy the s&p or total us market. A bank account is horrible idea when they have a long time horizon meaning they aren't affected by ups and downs of market. Bank accounts are for 6-8 months of salary for an emergency fund. You can read this wiki or ask an AI about the strategy. https://www.bogleheads.org/wiki/Main_Page https://www.bogleheads.org/wiki/Main_Page
bonesss 3mo ago
My kids have bank accounts to learn how to manage money, banks, and training: getting used to having money in the bank before, during, and after a trip to the mall. My hope is to let them screw up their finances when they’re little instead of 20-something. We’ve also setup tax-deferred retirement investment accounts for them. $1 at 20 can 70x or more by retirement. Mostly it’s the mental training though. Being ok “losing” money during a market correction, saving for wealth in parallel with saving to buy, seeing interest and returns over time, and having a long term plan.
- wojciii 3mo ago
  This is a very good idea. I will have to copy this. :D My oldest is 8 and can get a debit card now. When I think back I made a lot of mistakes that I made with money was around the time I was 18. They were expensive to undo later. My parents didn't teach me being responsive with money as they shown me how but didn't explain why.

nsvd2 3mo ago

1.75 is less than the money is losing value from inflation. If that savings is in USD it's quite a bit less than inflation over the past five years.

samudrijan 3mo ago

Look into a 529 college savings plan.

hiddencost 3mo ago

VTSAX, ASAP. Inflation is usually estimated at 3% + annually over a long enough time horizon. You're losing money.

Cider9986 3mo ago

You need to put them in a custodial brokerage account or whatever allows you to buy ETFs for them (not sure of best tax advantaged account for non-working kids) and buy the s&p or total us market. A bank account is horrible idea when they have a long time horizon meaning they aren't affected by ups and downs of market. Bank accounts are for 6-8 months of salary for an emergency fund. You can read this wiki or ask an AI about the strategy. https://www.bogleheads.org/wiki/Main_Page https://www.bogleheads.org/wiki/Main_Page

bonesss 3mo ago

My kids have bank accounts to learn how to manage money, banks, and training: getting used to having money in the bank before, during, and after a trip to the mall. My hope is to let them screw up their finances when they’re little instead of 20-something. We’ve also setup tax-deferred retirement investment accounts for them. $1 at 20 can 70x or more by retirement. Mostly it’s the mental training though. Being ok “losing” money during a market correction, saving for wealth in parallel with saving to buy, seeing interest and returns over time, and having a long term plan.

wojciii 3mo ago
This is a very good idea. I will have to copy this. :D My oldest is 8 and can get a debit card now. When I think back I made a lot of mistakes that I made with money was around the time I was 18. They were expensive to undo later. My parents didn't teach me being responsive with money as they shown me how but didn't explain why.