Gifts that grow up with the child
Many children receive a few hundred dollars a year in birthday and holiday money from relatives. Invested each year at 7%, $300 a year from birth to 18 grows to about $10,900, from $5,400 of gifts. Left alone until 30, it would be about $24,500.
A nice middle path is to invest part of each gift and let the child spend the rest, which teaches both enjoying money and watching it grow.
Common questions
Where should I invest a child's gift money?
A 529 plan for education, a custodial UTMA/UGMA account, or a custodial Roth IRA if the child has earned income.
Who controls a custodial account?
The custodian manages it until the child reaches the age set by state law, usually 18 or 21.
This calculator gives estimates for planning. Real returns, rates and prices change, so treat the result as a guide rather than a promise. Read how we build and check our calculators.