Having a child can be expensive. (According to CNBC, it costs about $300,000 to raise a child to age 18!) If you are looking for ways to save for things such as college, trade school or other costs of raising kids or even boost your child’s financial future, the financial experts at Fidelity may be a great resource. There are a number of different types of investment accounts parents can open to save for the cost of raising a child.
Savings account: Can be opened for a child of any age as long as an adult is the primary or joint account holder.
CD: Ideal if you can leave the money in this investment for a longer period of time.
Custodial Account: A brokerage account that allows an adult to invest on a child’s behalf. The money in a custodial account belongs to the child even if it is managed by an adult. When the child reaches 18 to 25, depending on the state, control of the account must be turned over the child, and they can withdraw money and use it for any purpose.
Traditional Brokerage
Account: Like a custodial account but the account is opened in the adult’s name and the adult can access the money when the child is a minor and retain control of it even when the child becomes a legal adult. This allows the adult to decide when the child might be ready to receive the investment.
529 Plan: A a tax-deferred educational savings plan.
Roth IRA for kids: Retirement accounts that may be opened in a child’s name if a child has earned an income in the year in which they want to make a contribution.
Trusts: Legal agreements that allow a third party to hold assets on behalf of a beneficiary or beneficiaries.
For more information on savings plans visit a brick-and-mortar Fidelity location, contact Fidelity at 800-86-UNION or go online to www.fidelity.com.