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Investing On Behalf Of My Kids.



May 08, 2012 – Comments (13)

Fellow Fools,

Today I will start investing on behalf of my kids. Don't misunderstand, the dollar amounts involved at this time are far from trust fund numbers. I'm just a middle class dad. The money to do this has been accrued over the last six months as I stalked the right companies and ETFs for this endeavour.  After today I'll set a little aside each month and buy more as the opportunities present themselves.

I'm a long-term investor by nature. I plan to hold onto the positions I buy today for a long time. Ultimatley I plan to give the contents of this portfolio to my kids when my oldest turns 40 in 2047. Hopefully after taxes, fees and inflation each kid will have around $50,000 in today's money to do with as needed. I'd love to see a percentage of the proceeds used by them to set up something like this for any future grandkids. It would make for a nice tradition that would not break the bank.

Anyway, I've written before about doing something like this. I just wanted to broadcast that I finally put words into action.

All the best,



13 Comments – Post Your Own

#1) On May 08, 2012 at 10:03 AM, TMFLomax (90.05) wrote:

Love it, Cato. Rock on!

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#2) On May 08, 2012 at 10:15 AM, catoismymotor (< 20) wrote:

Hey, Alice. Thanks. From reading the news recently I think your shareholder revolt pieces have had a positive effect.


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#3) On May 08, 2012 at 12:18 PM, jac58 (50.33) wrote:

Very admirable, and something I wish I had done when my child was born.  Now that I'm a fairly new grandfather, I'll try to set up a portfolio for my grandchild for his future.

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#4) On May 08, 2012 at 1:26 PM, dragonLZ (71.30) wrote:


I'm doing the same for my daughter who's 4 (investing $50 / week thorugh ShareBuilder), and let me tell you, she's much better investor than I am. Her portfolio is outperforming mine by quite a bit. I think she's trying to teach me a lesson as her stocks are buy-and-hold while mine are "try to time the market" kinda stocks.

Btw., I think you should consider this: Don't wait until your kids are 40 to hand them over the money from their portfolios.

Give them the money when they get their first child, but ask them to promise you that they will do the same for their children - that they will regularly invest small amounts of money for the future of their children.

That way your children will have the money (I'm sure you'll manage to accumulate $30,000 - $50,000 by their age 20 not 40)  available when they most need it, which will also help them be able to regularly (weekly / monthly) put aside small amounts toward the future of your grandchildren. 

Good Luck, Cato! 

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#5) On May 08, 2012 at 2:46 PM, Turfscape (< 20) wrote:


Do you expect that you'll begin to involve them in the investing decisions, or perhaps update them on the performance and your investment reasoning? Or will this be more of a surprise for them once you're ready to turn it over?


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#6) On May 08, 2012 at 3:22 PM, catoismymotor (< 20) wrote:

My plan is at some point to let them know I have this portfolio working for them. Beyond that I will not elaborate on the details. 

The proceeds from today and future purchases are to be a birthday present for both of them in 2047 when my oldest turns 40. Both were born in the same month but a few years apart. I have chosen to delay the grand payout until then for a number of reasons: 1) With age comes some experience and wisdom. I want them to be prepared to handle a windfall. 2) I don't want them to feel they can slack off from being good productive adults because their dad is going to swoop in at 20, 25, 30 with a stack of cash to save the day. 3) I want enough time to pass for the investments to snowball into something worth surrendering.

As both kids grow up I plan to teach them the value of saving and investing. I plan to start both early on their own individual portfolios and savings accounts that can be funded from money earned from chores and whatnot. Later when both land jobs in high school and college they can continue reap the rewards. I will help them with their investment decisions all along the way, even into adulthood, should they wish.

To sum up: I want to start them well on their own path of investing and saving before I say, "Oh, by the way: I have this money for you." 




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#7) On May 08, 2012 at 3:37 PM, catoismymotor (< 20) wrote:

And I do plan on introducing this idea to my children when they are older. I think it would make for a beneficial family tradition. I'll have to find to write this idea down on a recipe card and slip it in with great-great grandma's biscuit recipe. :)


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#8) On May 08, 2012 at 3:40 PM, valuemoney (< 20) wrote:

Your 3 points from #6 comment are the most important. :) I wish you well and your kids.

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#9) On May 08, 2012 at 4:30 PM, Turfscape (< 20) wrote:

>>To sum up: I want to start them well on their own path of investing and saving before I say, "Oh, by the way: I have this money for you." <<

That's sounds like a good approach. I hope your kids grow to understand the true gift you're giving them: reason.

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#10) On May 08, 2012 at 7:51 PM, Option1307 (30.61) wrote:

+1, nice work!

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#11) On May 08, 2012 at 10:17 PM, HarryCaraysGhost (68.06) wrote:

Awesome Cato! if you were so inclined I would be interested in reading about the picks you make.

Every time I see my Niece and Nephew I try and instill the virtues of compouded interest, at their age they could retire as millionares if done properly.


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#12) On May 09, 2012 at 12:39 PM, abeno (< 20) wrote:

Nice job!  Have you investigated any strategies that may allow you to minimize that taxes that (I'm sure) will be associated with these gifts?

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#13) On May 10, 2012 at 8:50 AM, catoismymotor (< 20) wrote:

Thank you. I have looked into such strategies. To say which idea I prefer would be premature since the need for choosing one is still a long way off.


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