Hi everyone, My wife and I are looking to set up investment accounts for our children and would really appreciate some guidance from experienced investors. We’ve been learning about different options for building long-term wealth for our kids and would love to hear what has worked well for other families. We’re especially interested in recommendations on account types, investment strategies, and reputable platforms to consider. We’ve followed the investment community for years and truly value the experience and perspectives shared here. Any advice or resources you can recommend would be greatly appreciated. Thank you! Reach out to me on
Accountant · Seattle, WA · Member since 2025 · 149 posts · 43 votes
1w
Great question, @Alyssa Bandit . starting early and contributing consistently can matter more than finding the “perfect” account. The best option depends on whether the goal is education, flexible wealth building, or retirement savings.
· 529 plan: Tax-advantaged education savings.
· UTMA/UGMA: Flexible investing, but the assets eventually become the child’s and may affect taxes or financial aid.
· Custodial Roth IRA: A strong long-term option once the child has legitimate earned income.
· Parent-owned brokerage: More flexibility and parental control, without special tax benefits.
· Real estate: A REIT or real estate index fund offers simpler, diversified exposure than owning property directly.
For most families, diversified low-cost index funds, automatic monthly contributions, and an age-appropriate allocation are a practical starting point. Compare platforms based on fees, investment choices, ease of use, and any state 529 tax benefits. Fidelity, Schwab, and Vanguard are commonly considered.
A balanced approach could combine a 529 for education, a brokerage account for flexibility, and a Roth IRA when earned income becomes available. All investing involves risk, including loss of principal, so consider your goals, time horizon, taxes, and liquidity needs—and consult qualified tax, legal, or financial professionals when appropriate.
Investor · Pacific Northwest · Member since 2026 · 511 posts · 290 votes
1w
I’d start by deciding what you want the money to be able to do before choosing the account.
If the primary goal is education, a 529 is hard to beat because of the tax advantages. If you want the money available for a house, business, travel, education, or whatever opportunity makes sense when they’re older, I’d also look at a custodial brokerage account. And once they have legitimate earned income, a custodial Roth IRA becomes extremely powerful because you’re giving compounding decades to work.
Whichever vehicle you use, I wouldn’t make the investment strategy complicated. Low-cost, broadly diversified index funds, automatic contributions, and time will do most of the heavy lifting. Fidelity, Vanguard, and Schwab are all reputable places to start. The habit matters more than finding some magical investment.
The other thing I’d do is teach them what the account is. Let them watch it grow. Explain ownership, compounding, risk, and why you keep buying when markets are ugly. Giving a kid money is useful; teaching them how capital works is considerably more valuable.
And one non-financial parenting tip: put them in something difficult and disciplined—sports, martial arts, wrestling, gymnastics, whatever fits the kid. Same advice for sons and daughters. Give them somewhere safe to struggle, lose, hurt, recover, and learn that discomfort isn’t an emergency.
As Adam Carolla has put it: “Broken bones will heal, but being a ***** is a lifetime sentence.”
If you want to get more specific about the account structure or how I’d divide the money between them, feel free to reach out.
CPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes
6d
Alyssa, I’d start by deciding what you want the money to be for, because that usually determines the best account type.
If the primary goal is education, a 529 plan is often the cleanest place to start because of the tax advantages tied to qualified education expenses. If you want the money to be more flexible and eventually belong to the child, a custodial account can work, but you give up control once they reach the applicable age. And once a child has legitimate earned income, a Roth IRA can become a very powerful long-term option.
I’d also think beyond just investment accounts. Real estate can potentially become part of the education strategy too. A properly planned rental can generate cash flow while depreciation may shelter part of that rental income from current tax. Some families intentionally earmark that cash flow for future education expenses while still building equity in the property.
The important part is not to assume that real estate cash flow is automatically tax-free. The result depends on the property, depreciation, financing, passive-loss rules, and how the activity is structured.
For me, the best approach is usually a combination: 529 for education-specific money, Roth once the child has earned income, and other investments or real estate for flexibility and long-term wealth building.
Feel free to DM me, I’d be happy to send over a few resources that might help you compare the options.
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