@Joeponcho wrote:
Hello,
I have an 11 yr old Son and 12 yr old Daughter. My Wife & I are about 1-5 yrs from retirement. We just paid off our mortgage and want to invest the equivalent of our mtg payment for our Kids. I am reading a broad amount of investments, from UGMA to ROTH IRA's to I-Bonds to 529's. What is a good way to diversify the investing for them? We already have 529's for them and want to do something else. It seems that ROTH's can only be opened if they're working (my kids are too young to work). Maybe the Market and I-Bonds?
My SO and I went the route of 529 and UTMA. As you probably know, the 529 has tax advantages, but is limited to education expenses. If the child does not go to college and/or has more in their 529 than they do tuition expenses, it can be difficult to get the most use out of the fund.
On the other end, UTMA/UGMA are much more flexible in how they're used, but depending on state, when your kid turns 18/21 they get complete and unrestricted control of it. If you doubt your child's financial management skill, this can quickly turn into a "woo, let's go party" slush fund that's quickly squandered.
As you say, diversify. Put into a few different things to cover different scenarios. For us, that's about a 70/30 529/UTMA at present. Our child is also 2, so there's a long time for us to adjust as we go.
