Your kids and grandkids may be too young to invest on their own. So stop buying them plastic toys and use that cash to help make them rich. If you invest just $1,000 a year from the child's birth to age 18 and do nothing but let the money ride, you can hand your grown kid 1.5 million dollars at age 65.
Putting that money to work should is not complicated, the S&P 500 is averaging about 8% a year annually, so you can just buy the index -- and let it grow
If you need the money sooner for college - consider a 529 plan. Withdrawals are tax-free if they're used to pay for school expenses -- like tuition, room and board, and books -- a bunch of states offer state tax deduction if you contribute to their plans.
Beyond education, you can look into a custodial brokerage where you manage the account. There are a few minor tax advantages and minimal restrictions on how the money can be spent when it's withdrawn --
Just remember the kid gets control of that cash when they are no longer a minor. That can be anywhere from 18 to 25, depending on the state. What would you have done with all of that cash at age 18?
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Editors' pick: Originally published Aug. 17.