As a parent, it is your right to think about the future of your kids. What are you saving for the next generation? This question might bug you quite often, as a parent.
There are several saving methods and tools that can be used to save up for your kids. But custodial investment accounts have been doing the rounds for some time now. It is a wealth preserving and accumulating tool that makes it easier for every parent to save smartly for their little ones.
A custodial account is in the kid’s name. But until and unless your kid isn’t legally allowed to have an account, this is managed by the parents or any other adult. Once the child becomes a legal adult, the account is then handed over to them.
How to Open a Custodial Account?
Parents and even grandparents are allowed to establish custodial accounts on behalf of their kids. The institute sets the terms for opening this account and it is then managed accordingly. This is why it is important for you to understand the policies of the bank before you sign up for having a custodial account for your kid.
God Forbid, if your kid dies or any other situation, the ownership remains. The adult remains the owner of the bank account.
Benefits of Custodial Account:
People tend to keep a lot of investments for their kids. Some might buy and sell gold, as the prices fluctuate to keep a good, high ROI investment for their child. Likewise, custodial accounts are a great choice as well.
Here are a few benefits that come along with custodial accounts and are worth consideration:
Custodial accounts are extremely efficient and they do not hinder you in any way. They are easy and quick to establish. Furthermore, they are cheap to set up as well. There is no hassle, whatsoever attached with them.
These accounts are flexible too. There are absolutely no contribution or income limits to these accounts. This might vary a bit according to financial institutes, but almost every bank has flexible policies.
Another perk of custodial accounts that makes them worth the consideration is variety. They can trade or hold any investment or asset that is offered via the financial institution. However, it is always better to learn about the policies in detail, before you set the account up for your kid.
Savings are extremely crucial. Whether you are a parent or you are a single individual; financial backup is important for everyone. You want to make sure that you are securing a part of your wealth, for the bad times, as they come uninvited.
Therefore, understanding the variety of options available and choosing the right one for your kid is important. Custodial accounts have skyrocketed in appreciation due to several reasons. And if you consider them, you will learn that it is, without a doubt, a great way to save money for your kids.