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Old 06-09-2016, 10:52 AM
addicted2fantac addicted2fantac is offline
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Custodial Account

Started an account for my godson as a gift but honestly no idea where to put the money to start. I would not mind something high risk given that he is 2 months old and there is time to recoup should something bad happen.

Does anyone have any thoughts about where to start? Mutual funds over stocks or vice versa?
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Old 06-09-2016, 11:01 AM
rjb1816 rjb1816 is offline
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I wouldn't pay the fees on a mutual fund especially with how young he is and you're starting off small. My advice would be to find a low cost index fund or small cap etf which has more growth to it and you can just let it sit and grow for him.
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Old 06-09-2016, 11:35 AM
capainter capainter is online now
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If he's likely to go to college and you want to gear this towards college savings, use your State's 529 plan. 529 Plans by State - College Savings Plans Network - State 529 Plans

Go for the College Savings Plan (normal account), not the prepaid trusts. Each one uses a specific manager/custodian that they use for the investments (T. Rowe Price, Vanguard, etc).

These plans are taxed like Roth IRAs (post tax money must be contributed but then grows tax free), so the tax benefit will far outweigh any investment cost/management fee that they will incur.

Would recommend targeting the lower cost, index type funds as well.

This can pay for college or when he's 18 he can just have the money if he doesn't go to college, but the gains in the account will get taxed. Still no worse a treatment than a normal taxable account so there's not a lot of downside to doing this, other than the limited investment options that your State will have.

My state (Maryland) offers an additional tax break for contributions to their plan on State income taxes. Not all states offer that, though.
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Old 06-09-2016, 02:00 PM
addicted2fantac addicted2fantac is offline
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Thanks guys I appreciate the help!!

I thought about the college fund but for now going to start the investment account and see how it goes, add to it each month. Did not know for sure if it would ever get up to something worthwhile for college considering the cost of dorming for a year is what $40K plus at most schools? I can only imagine what it will be like in 18 years.
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Old 06-09-2016, 02:57 PM
rjb1816 rjb1816 is offline
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Whoever you are using they usually have a set of no commission etfs that you can buy and sell for free. I would pick one out of that perhaps small cap or a combination with an s&p index etf and you can buy more shares for free every month when you add to it
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Old 06-09-2016, 04:12 PM
Pfffff Pfffff is offline
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Buy him gold and silver coins. US stocks are only 1% from their all time night. It's not the time to be buying those. Same story with bonds.
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Old 06-10-2016, 04:22 PM
capainter capainter is online now
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Quote:
Originally Posted by Pfffff View Post
Buy him gold and silver coins. US stocks are only 1% from their all time night. It's not the time to be buying those. Same story with bonds.
Completely disagree unless you're looking to actively make trades in this account. Gold is a terrible long term investment. I don't always agree with Buffett but his general view of gold is absolutely spot on.

Top 7 Warren Buffett Quotes On Gold Investing | Commodities | Minyanville's Wall Street
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Old 06-10-2016, 04:26 PM
rjb1816 rjb1816 is offline
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Buy him gold and silver coins. US stocks are only 1% from their all time night. It's not the time to be buying those. Same story with bonds.
This is for an 18 month old for about 17 years from now. Absolutely have to put it all in stocks doesn't matter where it is right now. If it goes down then every deposit he makes will get better and better returns
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Old 06-14-2016, 02:43 PM
addicted2fantac addicted2fantac is offline
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I am going to start by grabbing some shares of FCOM and adding to it every month. After a year or two then start grabbing pieces of other stocks.

Thank you all - I really do appreciate it.
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Old 06-14-2016, 06:10 PM
capainter capainter is online now
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FCOM is a good choice for your situation. Nice gesture for your godson.
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Old 01-18-2017, 08:25 AM
AuburnKid AuburnKid is offline
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One time actor until he let it be known he was a GOP, Ben Stein, now blackballed, always has the same advice: buy the Spiders (SPY). This is an ETF that mirrors the S&P 500 index. Pays a nice dividend.

See him on Fox bulls and bears Saturday mornings.

My personal choice is Southern Company (SO) for long run.
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Old 01-24-2017, 10:28 AM
Lamar Mundane Lamar Mundane is offline
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Be very careful with Warren Buffet's wisdom. He doesn't always practice what he preaches. Gold and silver are NOT bad investments. There may be better long term investments but just remember this... gold and silver have survived throughout time. Their ROI may not be as lucrative as some would like but if the stock market starts to correct in a big way just watch the big money boys rush to gold and silver. It is not for everyone but I have been fortunate to do very well with it. I would go with a State sponsored 529 if it was me.

Talk with a trained and CERTIFIED financial planner or a few to get their advice.

You are doing a noble deed for your Godson. Well done sir!

LM
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Old 01-24-2017, 10:43 AM
AuburnKid AuburnKid is offline
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Silver is for an active trader. In early 2000's Buffett bought tons of silver. His buying alone pushed the price from $6.50 area up to $7.00 When he stopped his buying, the price of silver retreated to the old price of $6.50 Many laughed at his foolishness.

Buffett then sat on the silver until the big run up that pushed gold to the $1800 area and silver over $45. Buffett sold in the $15 area to start and more near the top. His selling may well have been what killed the run-up of silver.

Silver is what is called an "consumptive metal". It is used on wound dressings as it kills bacteria. A boxcar load of silver is applied each year onto Low-E windows. These uses are never recycled. Fifty cents worth are in a cell phone.

That being said, when the Spanish stole the silver from South American mountains, one vein of silver was twelve, yes 12, feet thick. The new world is swimming in silver. Many copper mines made little money selling copper but every ton of silver a mine makes has a few pounds of silver. More demand for copper=more silver smelted.
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Old 01-27-2017, 09:31 AM
AuburnKid AuburnKid is offline
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I posted
"but every ton of silver a mine makes has a few pounds of silver."

it should read:

but every ton of copper a mine makes has a few pounds of silver.
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Old 01-30-2017, 08:00 PM
rjb1816 rjb1816 is offline
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Commodities are not true hedges unless you own the physical goods oils gold etc. It's basically a trade and shouldn't be used as a long term hold
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Old 01-31-2017, 09:08 AM
AuburnKid AuburnKid is offline
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In the 1970's DeBeers was pushing "Investment grade" diamonds as a hedge against the then rampant inflation. Sometime later, Australia finds a mountain of diamonds. A 1979 $10,000 diamond bracelet then might retail for $999. now.

NEVER buy diamonds as an investment.
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