Should you set up an investment account for your children?

The most important thing to consider before setting up an investment account for your children is determining the purpose of the funds. This could be a way to have a startup fund for when they’re ready to leave the nest. It could also be a fund for their first car or a way to save for college.

What kind of investment account should I open for my child?

The kind of investment account you should open for your child ideally is representative of your intended goal. If it's to grow funds for your kid's education, a 529 plan or Coverdell ESA is your best route. If it's to grow a nest egg for your kid's golden years and they currently earn income, a custodial Roth IRA is the way to go.

What is a kids' investment account?

Someone — usually a parent or guardian — sets up, funds and invests this type of trust, which the beneficiary will inherit. Of these eight investment account options, a kids' investment account is most commonly thought of as a custodial account. Read further for details on how to open one for the kid in your life. 1. Decide on an account type