Stop Gifting into a 529 Plan, Do A Roth IRA Instead
by Jeremy Reif, CRPS
Are you still giving boring CASH for Birthdays and holidays? Grandparents should change up their giving and give their grandchildren the gift of financial freedom. Look no further! This article outlines an excellent way to gift money instead of giving cash. Cash gets spent on mundane items. Give something that lives on perpetually in an investment option for your grandchildren’s future, a Roth IRA.
When it comes to investing in your grandchildren’s future, a Roth IRA is a fantastic choice. Children or young adults would rarely think about investing in their future. Roth IRA offers tax advantages and allows their contributions to grow tax-free over time. It’s a gift that keeps on giving! The key to this strategy is, they need to have earned income.
Starting A Roth IRA
To get started, consider opening a Roth IRA for your grandchild. It’s never too early to start investing! By contributing to their account, you’re giving them a head start on their financial journey and setting them up for success. Giving them the ability to have more time to make that investment grow with compounding interest.
Power of Compounding
You can only contribute up to their earned income or the annual contribution limit, whichever is less. Even small contributions can make a significant impact over time. Encourage your grandchild to make additional contributions whenever possible to maximize their savings.
Education
Lastly, educating your grandchild about finance is crucial. Teach them about budgeting, saving, and the power of compound interest. Give them financial books or share your own experiences to empower them to take charge of their financial future.
By investing in a Roth IRA, you’re giving your grandchildren the invaluable gift of financial freedom. This helps in educating our youth where our school systems lacks. Together, let’s secure a bright future for our loved ones.