![]() ![]() According to a report last year from Morning Consult, half of adults between the ages of 18 and 34 are not saving for retirement at all, and only 39% of those who are saving started in their 20s. You can also use the account to help teach your child the importance of investing for the future. Your options include a tax-advantaged 529 plan, "the primary vehicle of choice" for saving for college, according to Justin Halverson, a financial advisor at Minnesota-based Great Waters Financial, and a custodial brokerage account.Ĭurrently, the best rate offered on a high-yield savings account is around 1%, while the annualized annual return of the S&P 500 over the past 50 years is about 10%.Įven if the stock market doesn't produce annual returns that strong over the next two decades, you are still likely to make more money off an investment than you would from a savings account. So, while setting up a savings account for your child has perks, you will likely see a far greater return on your money if you put your funds in an investment account. If you wait until your child is 5 years old to make the same investment, that total falls by almost half, to just $7,700, even though you've invested just $1,800 less. ![]() For example, investing just $1 per day from birth can lead to more than $13,000 by the time your child turns 18 and may be ready to go to college or to start a career. Because of compounding, time can be more valuable than money, so even a little money can go a long way.
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