Kids bank account

[aim-high]

I want to create a savings account for my 12 year old. What is the best way to go about this ? its fine to have an online account and want to put the money in some CD for it to grow. He has no intentions to withdraw the money through ATM atleast for the next few years. Any recommendations/advise.

[disneysteve]

You can open a custodial account for/with him at any bank or brokerage. I'd suggest Vanguard. Their money market is paying 5.27% and you will have access to brokered CDs, treasury bills, stocks, bonds, mutual funds, ETFs, etc.

Once he turns 18, the count can be retitled in his name only.

[disneysteve]

If you need ATM access, then you'll want to stick with an online bank like Ally.

[Jluke]

When rates were low I had my kids account at CapOne paying 0.3%.

recently as rates increased the kids savings account stayed the same, 0.3%.

so I transferred the money to the credit union account we had setup early on and got a 4.x% CD for 12 months.

just pay attention to what the kids savings account pays in interest when deciding.

[kork13]

Personally, I'd just use Ally. Rates are decent-to-good, minimal fees, easy to use, and easily expandable to include savings, checking/ATM, or CDs as he grows up.

If an investment account is desirable, I agree that a Vanguard UTMA (custodial account) is a good choice -- I've got one of those set up for each of our kids.

[myrdale]

Call me old fashioned, but I would take him down to your local bank or credit union and open the account in person. Then once a month or when ever your ready to deposit money in his account let him fill out the deposit slip and hand it to the teller.

[Fishindude77]

Call me old fashioned, but I would take him down to your local bank or credit union and open the account in person. Then once a month or when ever your ready to deposit money in his account let him fill out the deposit slip and hand it to the teller.

I agree, and let them handle some real cash too.
They get enough electronics in their lives, introduce them to doing business with real people.

[disneysteve]

I think the "old fashioned" approach sounds nice but it's unrealistic in today's society. I don't think we'll ever be truly cashless but we're definitely moving more in that direction. SeaWorld and Busch Gardens parks just announced that they will be totally cashless as of 8/30. If your kid has been saving their change for your trip there, it won't do them any good. They'll need to use a debit or credit card or use their cash to buy a gift card at one of the kiosks. I think it's important to teach them how to function in today's society, not in the society that existed in 1970.

Your local bank is likely still paying 0.01% interest while my online account is paying 5.27%. Why would I let my kid do that?

Only 10-15% of younger Americans report using cash for purchases. In other countries, the number is even lower. The US is behind the curve when it comes to cashless transactions. Only 16% of Americans report carrying cash on them regularly.

[LivingAlmostLarge]

I do local bank as well and investment account for more than $1k

[aim-high]

great discussion everyone. Thanks. I have seen the excitement in my 12 year old face when i hand him little cash to go purchase something. He is already talking about saving money and not spend unnecessarily which is great to see.
i love the online way of putting money under his name (Ally or Vanguard), invest some portion in S&P 500 so he can see the money grow.

[myrdale]

i love the online way of putting money under his name (Ally or Vanguard), invest some portion in S&P 500 so he can see the money grow.

I thought you were just discussing savings. If your discussing investments, I wish I had started my Roth IRA 15 years earlier.

I don't know how he could invest before he has a taxable income, but as soon as he has a part time job, I would recommend helping him get as close to maxing it out. That seed will have so much time to grow through high school and college before he even enters the working force.

[disneysteve]

I thought you were just discussing savings. If your discussing investments, I wish I had started my Roth IRA 15 years earlier.

I don't know how he could invest before he has a taxable income, but as soon as he has a part time job, I would recommend helping him get as close to maxing it out. That seed will have so much time to grow through high school and college before he even enters the working force.

He could certainly invest in a taxable account if he has money even from gifts. As for a Roth, I totally agree. As soon as he has an income, help him open that. I think our daughter was 16 when she opened hers.

[Like2Plan]

How soon before your child's 13th birthday?

Fidelity has an account for kids between age 13-17:

https://www.fidelity.com/go/youth-account/overview?imm_pid=700000002093957&immid=100885_SEA&imm_eid=ep63786945449&utm_source=GOOGLE&utm_medium=paid_search&utm_account_id=700000002093957&utm_campaign=YAC&utm_content=58700007084936215&utm_term=Fidelity+teen+account&utm_campaign_id=100885&utm_id=71700000083495807&gad=1&gclid=CjwKCAjwrranBhAEEiwAzbhNtSbG30mof0Q5xBIJbAzXyRTVXc46PRUjFh_gf94XCtxuRx-nFOasYBoC7FQQAvD_BwE&gclsrc=aw.ds

They are currently offering a $50.00 bonus for opening this account.