A long term investment choice for my niece?
Question:
I would like to know what my best options are for this situation and also would like to know what steps I need to take. I'm also young (24 y/o) and have not made an investment such as this before.
I'd like this to be a long term investment to which I may or may not be able to contribute incrementally. Because it's long term, research tells me I should invest in something somewhat high risk (such as municiple bonds) to maximize yield. At the same time I don't want to spend $5000 on a CD and have it only earn 300 bucks after 18 years, CDs seem to have a very low yield. You know?
Any guidance would be greatly appreciated, thanks!
Answer:
dont ignore your own investments to do this for your neice
but if you dont want to risk money at all then a CD is probably for you, you should easily get 5%, which would start the interest at 250 year, can you start a joint savings account online with her? they make about 5%, are safe and you can easily add money
otherwise a bond would be fine as well i would think
one thing though, if you started a 529 education plan for your neice (in your control) with 5,000 you should get some tax benefits and in 18 years or so in a conservative 8% fund, that 5k is worth about 20k without adding to it, that would help a ton for her college
Bonds are good. and you can buy them in low denominations I think as low as $50. What I do is every birthday, christmas I buy bonds so that way they can be cashed in at a later date.
Kudos to you for wanting to set this up.
I would set up an investment account (which can be set up as a IRA or Roth IRA or regular account depending on what kind of access vs. tax protection you want) with a discount broker like Scottrade or ETrade. Or talk to investment department at your local bank.
When you set up the account the money will go initially into a saving account-style account and accrue some interest. From there you can start moving the money into mutual funds, bonds, stocks or a combination. Just be sure to educate yourself beforehand.
There are some really good sites to learn about investing. I suggest you go there for some info. Motley Fool is really good. The finance section on Yahoo is pretty good too.
Savings bonds and CDs are a decent idea. Forget Muni bonds. Neither you nor your neice are probably in a tax bracket where those make sense. A stock mutual fund would be another good idea, especially for the long haul.
I would suggest that you open a coverdell account at Scottrade.com in your niece's name. Then buy stock in FPL, Florida Power and Light. This is a very stable well run electric utility company, that is also the largest wind farm operator in the US. They pay a nice dividend too.
Here is a link on the company:
http://www.top10traders.com/viewpost.asp...
If you want to mix in some high risk, put 35% of the money in Tower Tech, TWRT.ob, they make wind tower support structures. Here is a link:
http://www.top10traders.com/viewpost.asp...
This is from http://www.Top10Traders.com
Hope this helps.
I think your best bet is a brokerage account at Fidelity, Vanguard or the like. buy a decent mutual fund and let it grow.
Mom and Dad may end up doing a tax form for her in a few years, but it won't be anything major for awhile.
Log onto Fidelity's site and there are phone numbers that you can reach a representative...it can't hurt, and you know you'll be doing it right!
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