Where should I put his money?

amother

Mon, Dec 24 2012, 3:56 am

From over the years and now his bar mitzvah, my ds has over $1500. Where is the best place to put it? If it makes any difference, my money is in Citibank.

asp40

Mon, Dec 24 2012, 7:10 am

We opened an account for each of our children when they were born. Just a savings account, through Citibank. I believe it is a special account, so we cannot take the money out and they cannot either until they are adults, I believe. In this economy it barely makes any interest but it is safe.

Mrs Bissli

Mon, Dec 24 2012, 9:51 am

You can leave in the bank acount (deposit covered by FDIC) but it won't grow that much.
Firstly, any idea how long you can leave the money--is it something for his yeshiva, or for chatuna, for retirement etc? If you have less than 5 years, then I would put into CD or money market fund. I won't choose too long maturity CDs because you're locking in interests at the current low rate.
If you have longer time investment horizon, then my first choice would be passive index fund (you might find minimum investment may be a bit higher but not sure about this). Something with low comission/fees.

naturalmom5

Mon, Dec 24 2012, 9:57 am

Whatever you do make sure its in an acct where ds cant touch it till he is 21 or older. My husband had 5k from his bm .When he was 19, he took it and bought a car and blew it all.

theprocastinator

Mon, Dec 24 2012, 12:04 pm

mutual funds are more risky than a CD but have a higher rate of return.

mommyhood

Mon, Dec 24 2012, 12:48 pm

My parents put my money (and my siblings) into savings accounts where we both had access. I added to it as I earned money and took out for spending money in seminary and for the occasional vacation.
Dh's parents did the same, they taught us the value of saving money and trusted us not to waste or savings and we both came into the marriage with a nice balance in our savings account.
I don't think it's right to hold the money hostage until 21. I could hear maybe 18 but it's the child's money they should have rights to it.

Mrs Bissli

Wed, Dec 26 2012, 5:46 pm

Hashemlovesme wrote:

what about a bond?

Treasury/US Gvmt Bond yields are quite low.
Muni bonds are only relevant if you're worried about tax rates.
Israel bonds used to have decent return but yields are similarly low nowadays, the higher yielding ones have much higher minimum investment threshold.
You can buy individual corporate bonds if you have a brokerage account though you need to watch out for bankruptcy/credit downgrades.

max

Sat, Jan 05 2013, 9:34 pm

I bought my son stocks with his bar mitzvah money and mutual funds, the funds were a disaster but the stocks did very well your bank will have alot of ideas to offer for free it depends how aggressive a portfolio you want to start.

amother

Sun, Jan 06 2013, 11:18 am

If he isn't going to need it for years then put it in a Roth IRA. This way it is tax free now and tax free when he withdraws it - which legally has to be at retirement but with penalties can be before.

yingsthings

Mon, Mar 11 2013, 12:26 am

You cannot open an Roth IRA for someone unless they have EARNED income. Meaning they need to have a job and the money needs to be reflected on a W-2. What they receive as gifts do not count.

I tried to do the same thing for my DD & DS with the money I've accumulated for birthday gifts, etc. I finally just opened a 529 with the money so it can accumulate for their education later on.

On the positive, the stock market has rebounded and they each have enough to cover 2 yrs of current tuition in an in-state school. I chose a fund family managed by Vanguard with a low expense ratio.

nyer1

Mon, Mar 11 2013, 11:52 am

my family's financial advisor told me that right now money markets aren't that high of an interest rate, so you're most likely best off just putting it into a savings account. as you keep adding money to it gd willing over the next few years, you can think of investing elsewhere, but 1500 is not a lot to start investing in the market or anything like that. I would just do savings acct.