Would you consider it fiscally irresponsible to invest some of my 4 year old son's ugma college fund in?

Question:

emerging markets exchange traded funds that invest in latin america, russia, india, and indonesia? out of a $17,000 account, i have about $8,000 of it in what would be considered emerging markets and small cap exchange traded funds. the other half of the account is in large cap domestic and international funds. in my mind, i do believe that these funds will outperform over a 15 year period and they are at least diverisified over many companies. also, since i am the one that ultimately will have to pay for his college and i contributed at least half the money in that account directly from my paycheck, i sort of feel like i am justified in being a bit aggressive. it may be more of a risk to not take any risk. what do others think about my allocation? is it responsible all things considered?

Answer:
No. I don't think so. I don't have an UGMA account for my children but I do have an account with Fidelity for them -- and my investment approach for them is aggressive with lots of emerging markets and small caps stocks, mutual funds and ETF.

You have time on your hands if your kids are still small. As they grow older, you can change your portfolio into less risky investments to preserve your balance

Yes, I think that investing over half of the account in emerging markets is irresponsible. If you want higher returns invest in developed countries but in small cap indexes.

Remember that if you have a portion of the existing investment in international funds and then add a big investment in emerging markets then you'll have a huge portion of the total that is susceptible to risks from outside your country. What happens, for example, when the currency risk (which is completely uncompensated, BTW, and I don't know why you'd want to take uncompensated risk) works against you?

Also, 14 years is not forever. It's been about 7 years since the tech bubble burst and the S&P still isn't back to where it started 2000. It's close but not quite there yet.

Irresponsible is going a bit far. Very aggressive. Realize you will not be able to keep the money in those markets for 15 yrs as will have to pull back to a lower risk profile a few years before he reaches 18 in order to make sure $$ is available. If that coincides with an emerging markets rout (they happen from time to time) that will be an issue. Might be better being so aggressive with your own retirerment funds while easing up in the ugma. I aplaud your effort & understanding either way.

Would you consider it fiscally irresponsible to invest some of my 4 year old son's ugma college fund in?

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