Parents are always looking for ways to help their children prepare for their futures, and what better way to do that than to encourage them to invest their own money into a high-interest retirement account early on? A self-directed IRA is a great way to earn more interest on a retirement account, but can children take advantage of these accounts as well? Yes and No. The answer isn't quite as cut and dry as I would like, but in the right circumstances some children can take advantage of a SDIRA, find out how your child can.
If you want your child to be able to invest into an IRA you has to make sure he works sometime throughout the year. This idea is very important to realize, because without some income of his own it's not possible to invest into a self-directed IRA. As soon as your child gets a summer job or a part time gig after school he can begin socking away money for retirement or you can do it for him.
Even though having a job is enough to allow your child to invest into a SDIRA, it does not mean that he will be able to make the maximum contribution of $5,500 each year that he works. That number is only valid when at least $5,500 is earned throughout the year. If your child only earns $1,500 at his summer job then that is the maximum amount that can be contributed to the IRA account.
It's amazing how much money a simple SDIRA account can earn for your child over his lifetime as long as he leaves it in place. Just a few thousand dollars can result in hundreds of thousands of dollars over time as long as it is invested carefully. Make sure that your child is taking advantage of the options that he has available to him. Most kids don't even consider investing in retirement early on, but that's when investing pays off the most.
Just make sure that your child is taking on an investment that has a good chance of paying off over time. Children like making investments in something that they are interested in, but an interesting investment isn't always a good one. Encourage your child to try and choose his own investment, but also guide him toward something that has some value. If you aren't sure about an investment he's interested in, it may be worth seeking expert help.
Cars or new gadgets are an appealing way to spend summer earnings, but a careful investment into a self-directed IRA could make all the difference when your child finally decides to retire. Believe me, his will thank you later in life for pushing him toward investing into his future.
If you want your child to be able to invest into an IRA you has to make sure he works sometime throughout the year. This idea is very important to realize, because without some income of his own it's not possible to invest into a self-directed IRA. As soon as your child gets a summer job or a part time gig after school he can begin socking away money for retirement or you can do it for him.
Even though having a job is enough to allow your child to invest into a SDIRA, it does not mean that he will be able to make the maximum contribution of $5,500 each year that he works. That number is only valid when at least $5,500 is earned throughout the year. If your child only earns $1,500 at his summer job then that is the maximum amount that can be contributed to the IRA account.
It's amazing how much money a simple SDIRA account can earn for your child over his lifetime as long as he leaves it in place. Just a few thousand dollars can result in hundreds of thousands of dollars over time as long as it is invested carefully. Make sure that your child is taking advantage of the options that he has available to him. Most kids don't even consider investing in retirement early on, but that's when investing pays off the most.
Just make sure that your child is taking on an investment that has a good chance of paying off over time. Children like making investments in something that they are interested in, but an interesting investment isn't always a good one. Encourage your child to try and choose his own investment, but also guide him toward something that has some value. If you aren't sure about an investment he's interested in, it may be worth seeking expert help.
Cars or new gadgets are an appealing way to spend summer earnings, but a careful investment into a self-directed IRA could make all the difference when your child finally decides to retire. Believe me, his will thank you later in life for pushing him toward investing into his future.
SHARE
