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jack grebe
07-25-2006, 11:28 AM
been saving change for the grandkids and would like to put it in a fund , but these "online brokers" all want way more than I have saved for them to open an account. Any ideas

ljb5
07-25-2006, 11:33 AM
What is your goal for this savings? Is it going to be used for something specific, like their college education, or just general savings?

jack grebe
07-25-2006, 12:00 PM
general savings. I am thinking of mutual funds that I can add to as time goes on.

jack grebe
07-25-2006, 12:01 PM
grand kids are 1 and 4......they won't need it for awhile

ljb5
07-25-2006, 12:02 PM
The next question is how 'hands on' do you want to be?

Are you a 'set it and forget it' type....

Or do you want to be active in making decisions?

jack grebe
07-25-2006, 12:04 PM
set and forget......but would like the ability to change from time to time

ljb5
07-25-2006, 12:19 PM
set and forget......but would like the ability to change from time to time

Someone else is going to have to tell you about the tax implications of setting up an account for a minor. I know there are several different types of accounts.

As for the investment type, it sounds like exchange traded funds (ETF) would be appropriate. Basically, it's a very boring mutual fund with very little management -- hence it has lower fees and commisions than an actively managed mutual fund. It should be less volatile than stocks or mutuals, but you can still trade it at will.

I think E*Trade will let you open an account with a minimum of $1000. TDAmeritrade has no minimum to open an account, but I think they might impose some fees if there is less than $1000 in the account.

I know that Janus had a minimum requirement of $2500 investment, but it didn't have to be all at once. If you signed up for automatic withdrawl so you deposted $2500 over the course of a year, they would let you do that.

jack grebe
07-25-2006, 12:30 PM
thanks, Ill look into ameritrade. the change only adds up to about 250 a year each:D

ljb5
07-25-2006, 12:35 PM
Since you're looking at a relatively long time horizon (14-20 years), the other option might be to buy a small amount of a couple of stocks you really believe in.

It's a gamble for sure, but it could pay off huge, like buying Microsoft in 1990.

Personally, I own a small amount of some superconductor companies (ISO, AMSC, IMGC and SCON) for two reasons:

(1) I believe the technology will be very important in the next 10-15 years.

(2) The companies are small enough that buying now is like getting in on the ground floor.

So far, they haven't been doing very well and there's a chance they will go to zero, so I didn't invest more than I can afford to lose.

George Jung
07-25-2006, 12:39 PM
Great idea, and I can tell you, I'd have been t ickled had my grandparents set some funds aside for me.
I've been putting money aside for my kids since their birth; recognize that, done correctly, it has some pretty significant tax (savings) implications for you. Your CPA should be able to advise you.
Interesting how much better my kids investments have done than have mine; I'm more conservative in that regard; theirs I've put in stock mutual funds, anticipating their longer investment horizon; they've averaged a bit over 16% a year, though with greater vaccilation in the funds. They have a mutual fund from Gabelli (it's a load fund) but I'd recommend a no-load, maybe something from Vanguard or Fidelity. You can invest direct, too, if you don't want to use a broker; might save some fees, FWIW. Consider a Roth IRA for them when they get a bit older; doesn't count towards any aid forumulas for College scholarships; you can take it out early without the restrictions of a regular IRA. If you can put some money away for them now, keep in invested, a small amount can grow a lot before retirement.
Kind of fun, isn't it?

Gary E
07-25-2006, 12:44 PM
Google "Motley Fool" and American Association of Induvidual Investors...

As for who to use... E Turd or Chuck or Fidelity, or the like, Pick the cheapest commish, for long term I might go with fido... but keep in mind, Mut Funds are ALL pretty much the same ol'e crap... they are as dishonest as can be and still be legal, beware.

ljb5
07-25-2006, 12:45 PM
the change only adds up to about 250 a year each:D

Make sure you read the fine print --- especially the hidden fees.

They love to screw small investors.

Some day, they may send you a monthly account statment and you'll see that they've imposed a $30 per month fee because your account is so small. The only way to get out is to pay the $12 commission to sell everything and then pay a $50 account closing fee, or whatever...

Gary E
07-25-2006, 12:49 PM
set and forget......but would like the ability to change from time to time

BE VERY CAREFULL doing that... that is EXACTLY what they want you to do...EVERY SWITCH costs a selling commish and a buying commish....

It's called churning in the trade..

Meerkat
07-25-2006, 12:50 PM
Bah - look into "no load" mutual funds. You can deal directly with many of them and thus avoid brokerage fees compeletely and buy and/or sell fees are often small to non-existent.

With an autmoatic transfer from your bank to them each moth, you can "set it and forget it." ;)

Gary E
07-25-2006, 01:26 PM
Jack,
There are other ways that are good for kids that in many peoples opinions are bettr than MutFunds...for example, I think McDonnalds allows a youngsters $$ to be invested in Co stock and the dividends reinvested to buy more shares... symbol MCD on NYSE

http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=mcd&sid=0&o_symb=mcd&freq=1&time=8

THis does several things... every time the youngster goes to Micky Dee's they have a sense of what the Co does, and they know in some small way, they are profiting from each visit... It also can be of emnse value to them in later years.

I think the Motley Fools can help wit that sort of tact if your intrerested...

jack grebe
07-25-2006, 01:28 PM
I don't plan on them knowing;)

Gary E
07-25-2006, 01:38 PM
They dont HAVE to know....and why do you want to continue the "lets keep'em stupid" trend in finanacial matters.... I WISH that more emphisis was placed on money, how it works, and why it works, to kids starting in about 11 yrs of age... but seems it;s just gona be same ol'e same ol'e ....Ya know who's kids grew up smart about money?? the bankers kids, the stockbrokers kid. What did I learn?... Dad was an engineer, take a guess.

rant off

Meerkat
07-25-2006, 01:38 PM
Please look into no-load mutual funds! Don't pay a broker if you don't have to!

Meerkat
07-25-2006, 01:39 PM
They dont HAVE to know....and why do you want to continue the "lets keep'em stupid" trend in finanacial matters.... I WISH that more emphisis was placed on money, how it works, and why it works, to kids starting in about 11 yrs of age... but seems it;s just gona be same ol'e same ol'e ....Ya know who's kids grew up smart about money?? the bankers kids, the stockbrokers kid. What did I learn?... Dad was an engineer, take a guess.

rant offScrews? ;) :D

John of Phoenix
07-25-2006, 01:40 PM
Do you really want to encourage those kids to eat McDonald's food?

"I'm a shareholder! Supersize me!" Blehhh.

Ask your accountant about 529 plans.
Great tax advantages but best of all, you keep control of the money if they don't want to spend it the way you'd like them to.

Gary E
07-25-2006, 01:42 PM
Screws? ;) :D

and Nuitz, and gears and tools, and painting, and and and...

Dad was a great teacher,

Meerkat
07-25-2006, 01:53 PM
Jack;
Start here: http://www.fool.com/school/basics/basics.htm

and here: http://www.sa.utah.edu/personalfinance/handouts/investing/broker.html

Tristan
07-25-2006, 04:42 PM
Get an e-trade or TD Ameritrade account. If you want to buy mutul funds there is NO brokerage fee for most. You can set up custodial accts for them but they will have to pay tax on income and cap. gains if they earn too much. Otherwise the accts are in your name and you pay the tax. If you want to buy individual companies you can find quite a few that you can buy directly, setting up an acct with as little as 1 share and adding cash as you wish. I used to have Dividend Reinvestment accounts with Exxon, Chevron, Colgate, Pepsi, etc., and generally did well.

jack grebe
07-25-2006, 04:53 PM
this is reall a great thread:D thanks for all the info

hokiefan
07-25-2006, 05:51 PM
Don't have a lot of advice regarding investing (I'm trying to learn myself) other than avoid fees with a passion. They eat into your return and that loss compounds (negatively) over the years just like the gains. You might want to look at spiders, which is basically and index fund for the S&P500. There are others but I don't know much about them. Warren Buffet recommends an S&P500 index fund as the best bet for someone who doesn't want to research and pick their own stocks.

I would take the opportunity over time to teach kids about money. My dad was an engineer as am I, and I learned a lot from him. But not about money. He taught me to save, live within my means, etc. but not how to put your savings to work. I can't complain, but I could be way ahead of where I am now if I new at 20 what I know at 45. And I don't know enough now, but that is changing! I probably would have the option to retire now armed with the knowledge at 20. I might not, but work becomes fun if you have the option to walk away...

I've started trying to teach my daughter (14) the basic concepts of investing and the power of compound interest. She gets bored quickly, but one interest exercise got her attention. I got her to "deposit" $1 in an account, where I paid 10%/day for 30 days (to simulate 30 years). I had her estimate the total after 30 days, she guessed around $5. I made her calculate and add up the interest every day. She was surprised to see the final total add up to $16.94. I do think she is learning and she loves to rib me about my infinite wisdom in holding Lucent all the way from $65 to ... well its too painfull to say! My first tough lesson in investing.

Teach them all about money, they will thank you and pass it on to their kids.

Bobby

Dave Davis
07-25-2006, 05:59 PM
Be wary if you intend for these funds to be used for college. Kid's are expected to dedicate a greater percentage of their own assets (in their name) to their education than are parents/others when it comes to financial aid. And 529 plan money comes off the top of "unmet need" and will hurt them for grants/scholarships/work study/etc. I bonds are inflation protected, non-taxed on withdrawal for education, and easy for small amounts. Ok, rotten return this six months (hide the inflation) but over 6.6 pct the last six months. They'll go back up. 6 pct not taxed is not an awful return, and safe to protect principal.

ljb5
07-25-2006, 06:36 PM
this is reall a great thread:D thanks for all the info

Remember, like all free advice, it's worth every penny!

jack grebe
07-25-2006, 07:14 PM
:D I heard that:rolleyes: . I'm just fishing for a couple of good places to start......I plan on making my own decisions;)

ljb5
07-25-2006, 07:17 PM
I kinda like the idea of taking a gamble on some small company with emerging technology that might become the next Microsoft.

If it pays off, they'll sit around in their yachts telling their friends, "Grandpa was a visionary...."

If it doesn't pay off, the stock will be worthless, so they'll never find out.

.........of course, it's not my money I'm thinking about betting. :D

CAPNBIL
07-25-2006, 08:40 PM
You might want to get into Yahoo finance and set up a test portfolio. They have a great charting setup so you can compare stocks and mutual funds. You can compare performance on a large variaety of funds and stocks just by typing in their symbols which you can find on Yahoo. Then by seeing how they compare with the averages, S&P, or Dow, you can figure which ones regularly outperform over short and long term. Doesn't cost you a nickel, then you can invest in whichever suits you. Past performance is no guarantee, but regular winners are probably your best shot.

Oyvind Snibsoer
07-26-2006, 06:34 AM
There's a Stavanger, Norway based, independent mutual fund management company, Skagen Funds, that has showed a great track record ever since they opened for business in 1993. Their chief fund manager is considered by many in the industry to be one of the world's foremost in his field, and they have very reasonable rates. You may want to check them out at http://english.skagenfondene.no/ There's also a very positive article about them at http://www.globalinvestormagazine.com/default.asp?Page=5&ISS=21697 (You must be a subscriber to read the whole story)

Disclaimer: No affiliations, I'm just a happy customer. We've put most of our and our kids' savings in their various funds.