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Investing in Your Child's Future

Parents can achieve incredible financial gains for their children by beginning the investment process now.

While understanding what the best investments for kids are, it’s a broader topic in the sense that there are many important facets to the discussion. Things like when you should begin investing for your kids, what types of accounts are appropriate for kids, and what are the tax ramifications of various investment strategies. When it comes to investing on behalf of your children and making strides towards their very bright financial future, all of these things can be important elements.

If you would like professional help determining what investments to select for your kids, we encourage you to contact our partners at Fellows Financial Group to speak with a financial advisor.

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Investing for Your Child’s Experiences

If you want to save or invest money to help your child out with adult expenses or a down payment on their first house, you’ll want to put that money in an account that’s a little more liquid (or accessible) than a Roth IRA. While you won’t have the power of several decades of compound interest to follow your kids into their retirement years with these options, they will have access to the funds when they get to those major life events.

Uniform Gifts to Minors Act (UGMA) and Uniform Transfers to Minors Act (UTMA)

If the account you want to open for your child is one you’re not planning to touch for five years or more, you can consider a Uniform Gifts to Minors Act (UGMA) or a Uniform Transfers to Minor Act (UTMA) account to invest in good growth stock mutual funds. You might think of these accounts as essentially custodial accounts that are non-retirement accounts.

What’s the difference between a UTMA account and a UGMA account? UGMA accounts are typically used for cash, stocks, mutual funds, bonds, and insurance policies where a UTMA account can also include any type of assets such as real estate and other items.

You can contribute to a minor’s UTMA or UGMA account based on federal gift tax exemption rules. It’s worth noting that these contributions are irrevocable meaning you can’t transfer them back.

Here are some of the key things you need to know about these accounts:

  • Just like with a Custodial IRA, UGMA and UTMA accounts are opened in a child’s name and a custodian is named—usually a parent or grandparent. But you can choose anyone to manage the account.
  • The custodian will have full control of the account until the child reaches a certain age.
  • UGMA and UTMA accounts are often used to save for college—after ESAs and 529s—but the money can be used for anything.
  • There are some tax advantages to using UGMA and UTMA accounts. Since they are in your child’s name, the accounts will be taxed according to their tax bracket. The lower tax rate for children means they’ll pay less in income taxes.

Discuss tax ramifications of a UTMA or UGMA account with your tax professional.

Your Own Savings Account

Some parents want to build the best investments for kids, but don’t necessarily want to fool with custodial accounts or open additional accounts in the children’s names. You can still set money aside “earmarked” for your kids in separate savings or brokerage accounts that remain in your name. Then, when you deem the time is right, you can give this money to your children. Make sure you’re examining all tax ramifications associated with gifting money to children.

CD Ladder

Another possible route for investing for your kids is a certificate ladder. If you don’t want to mess with the market or IRS regulations, a simple CD ladder can be a great way to save money in your child’s name.

When implementing a CD ladder, you simply purchase multiple certificates of deposit with varying durations (and usually interest rates). This will result in having several CDs that mature at regular intervals. As long as you don’t need the money, you can continue to roll these CDs over into new terms. You can repeat this process as long as you wish to keep the money in savings and keep the money-generating interest.

Money Market Account

If the idea of basically handing your kids a blank check makes you nervous, you can open a money market account in your own name and save over time until you’re ready to gift the money in the account to your kids. Technically this isn’t investing, but money market accounts are really great for short-term savings goals (as in five years or less). They have low-interest rates, so your return won’t be much, but you will be in control of when and how your kids receive the money you plan to gift them.

Investing for Your Child’s Retirement

It’s never too early to begin saving for retirement. Setting just a few dollars aside each month can help your teen get a jump start on their retirement savings and experience the power of compound interest!

If your kid's college accounts are already funded, and the child is working a job, get that IRA going. IRAs, or Individual Retirement Accounts, are investment accounts geared towards saving for retirement. If your child has a part-time job, they don’t have to wait until they have a full-time job or are out of college to get started. There are no age restrictions on opening an IRA, so age will not prevent your child from opening an IRA.

They have various tax benefits depending on the type of IRA, and they have various restrictions around participation and how the money is withdrawn.

The primary participation restriction revolves around earned income. Your child must bring in some kind of earned income in order for you to be able to open an IRA in their name, and allowances don’t count. Plus, they can’t contribute more than what they make that year. Note that the IRS defines earned income as taxable income or wages. So, if your child has a W-2, he or she can contribute to an IRA.

IRA accounts can be opened as custodial accounts where the parent is often the custodian. The custodian manages the account until the minor reaches age 18 or 21 (depending on the state). The funds in the account belong to the child whether or not the child is still considered a minor.

Roth IRAs are more flexible than traditional IRAs. While typically withdrawing money from retirement accounts early comes with penalties, Roth IRAs let you withdraw the contributions early if you need the money (not the earnings/gains).

Why would a Roth IRA be so impactful for a child’s future?

The key to this is compounding. Starting in your teenage year's regular contributions can result in massive wealth being generated for later years. As long as your child is earning income, YOU as the parent can contribute to the Roth IRA in your child’s name. If you have the means, the long-term benefit here really can’t be overstated.

Investing for Your Child’s Education

529 College Savings Account

For parents or guardians looking to fund their children's education, a 529 tax-advantaged account is an optimal savings vehicle for K-12 tuition or college tuition.

A 529 plan, otherwise known as a qualified tuition plan, is a tax-advantaged savings account used for education expenses. Unlike other tax-advantaged savings accounts, a 529 has no income limits for plan contributions.

Anyone can contribute to a 529 plan, whether it be through monthly contributions or gifts from friends and family.

Education Savings Account

An Education Savings Account (ESA or Coverdell Savings Account) is another great college savings option. They’re simple and similar to an IRA, but there are a couple of limitations. First, the maximum you can invest in an ESA is $2,000 a year. And second, married couples making more than $190,000 a year and single parents bringing in more than $95,000 a year can’t make contributions to an ESA.

If you want to invest beyond the $2,000 limit or if your income exceeds the ESA income limits, you can put some extra dollars in a state-specific 529 plan.

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Investing in your kids is not just about what you give them, but who they become.

No matter how you plan on investing in your child’s future, it’s important to sit down with your kids when they’re old enough and share your heart behind your gift. They should have the character, maturity, and wisdom to be a good steward of the financial gifts you are entrusting to them. In Dave Ramsey's book Retire Inspired, he explains that your greatest gift to your children and grandchildren will be what you leave in them, not what you leave to them. If you want your financial gift to be a blessing, make sure you’re teaching your kids the value of hard work and responsibility. 

Ready to Start Investing for Your Kid’s Future?

USSFCU has partnered with Fellows Financial Group to bring our members world-class financial management and planning services. Get the help of an experienced investing professional to walk you through all your options. Learn more by visiting ussfcu.org/fas or schedule a time to speak to an advisor using the button below.

Schedule an Appointment

The content on this page provides general consumer information. It is not legal advice or regulatory guidance. We do not endorse or guarantee the accuracy of third-party information.

It's your staff that make us keep coming back for years and years.

Thank you for letting all of us be a part of your celebration - Happy 85!

USSFCU makes me feel more appreciated than any bank I've had before and helps me save for my future home.

USSFCU Happy 85!!! Best banking and customer service since I was 12. Thank you!

Happy Anniversary to an institution that has become part of our family! Thank you for everything!

Happy Anniversary, thank you for helping retirees with better rates.

Happy Anniversary and thanks to all employees for always being friendly and providing great service.

It's your 85th anniversary, and it's my birthday month - Happy Anniversary to you and Happy Birthday to me!!!

I really enjoy USSFCU's great customer service! They are always so helpful when I call or visit a branch and make my banking experience easy and enjoyable. Thank you!

Congratulations on your 85th year! Thank you for being the best credit union in the business.

Happy 85th Anniversary! I've been a member for 27 years and have always appreciated the great rates and service. Here's to at least 85 more years...

I was referred to USSFCU when I was building my swimming pool. This is the first banking experience that I have had in 48 years that has been so pleasant. USSFCU is the best and the ease of utilizing them for your banking needs is a MUST! Happy Anniversary and MANY MANY MORE!

Happy 85th Anniversary USSFCU and thank you for providing the services that you do as you helped my family to fulfill a dream that we had and it is certainly appreciated.

Happy Anniversary! Much to be proud of... especially the customer service.

When I joined in 1992, I was young and didn't have much financial wherewithal. Over the years, when I've needed a loan, you've helped me out. When I had extra money not doing anything in a savings account, a representative reached out to me to open a money market account. When I bought my first car, you gave me that loan. You've helped me on my fin...

Happy 85th Anniversary! Thank you for providing such great service to all of us who have worked for the U.S. Senate. Having a credit union devoted to our financial care is appreciated. Here's to 85 additional years!!

Happy Anniversary, USSFCU! I have been a proud member since 1993 when I opened my account upon getting my first job out of college in the Architect of the Capitol Curator's Office. Thank you for your service! It's been a great banking experience for me for 27 years.

Happy anniversary! I'm a 20 year member -- I've had/have numerous loans and have always had a great experience working with your staff.

Happy 85th Anniversary. I have been a member for 27 years. I have had nothing but success with my financial goals as a member of USSFCU. Thanks so much!

I joined USSFCU in 1993. I had just started a job as Executive Assistant to a U.S. Senator and being a Black Woman, I felt intimidated and not always accepted in the Senate environment. The one place I felt truly welcomed and comfortable was in the credit union. The staff was professional, courteous and made me feel at home the minute I walked in ...

I am so grateful to be apart of the USSFCU family. I have received outstanding service and am very glad I decided to join this credit union.

Happy 85th to USSFCU!! Thanks for everything! Here's to 85 more years!

Happy 85 years! May your operations continue to flourish!

The USSFCU has been great. I signed up my 2 sons and they have been able use the banking services for their higher education.

Happy 85th from a 53-year member. I remember when the credit union was located adjacent to the barbershop in the basement of the Old Senate Office Building. Great service then! Great service now!

I work in-state but your agency has made it so easy to do business with in many ways. I have a VISA, checking, savings etc. with you and even when I call from Ohio, everyone is so helpful and eager to help. Thank you and Happy Anniversary.

My 38th year as a USSFCU member! I love the personalized service and your kindness over the years. Happy 85th Anniversary!

My first job in Washington was at NRSC which came with Senate FCU privileges. That was in 1989 - I left DC in 1995 and to this day I love the reaction when people see the senate emblem on my credit card and checks.

I joined right after college after accepting my fist job in the USS; now 26 years later, I'm still a member and so happy with your products and service! Congratulations on 85 years of doing right by your members!

As a member of USSFCU since 1967, I can remember when it consisted of one room in the basement of the Russell Building. Congratulations!

Happy 85th! You don't look a day over 30.

Thanks for the great service members receive every day. Happy anniversary.

I have been a member of USSFCU for sixty years and it is still my financial institution of choice. Their service is exceptional and their staff is friendly and helpful.

I was a senate page and messenger for the sergeant of arms when I was 15. 43 years later I'm still a member. I could find no better place to bank despite overseas military serves. Simper Fi! Works here also.

Happy 85th Anniversary USSFCU. I have been a member since I began working for Senator Alan Cranston (Democrat from California) in 1982. Although, I left the Senate when Senator Cranston left office, I have remained a member of the United States Senate Federal Credit to this day. I have had nothing but positive service from USSFCU and will continue ...

More than 20 years with the USSFCU. I am grateful for their friendship. Happy Anniversary!

Happy anniversary! I feel safe and secure banking with my USSFCU family.

Happy anniversary! The wife and I are so happy to be members.

Happy Anniversary! Keep adding value to the great banking services provided to make peoples' lives better.

Happy Anniversary! Thank you for all you've done for our family over the past 3 years.

Congrats!! This is the first credit Union I've ever joined and my experience so far has been fantastic!! From everyday help with new cards, to recently adding my new wife to our account after our wedding on 9/27! Thank you for all of you do!! Looking forward to another 85 years!

It's hard to believe how much we've been through since we got together in 1972- two children with accounts, cars, home improvements. I don't know what I would have done without you.

Happy Anniversary to our wonderful family! Wishing you many more years of accomplishments!

Happy Anniversary to USSFCU! I have been a member since 1982. I only worked in the Senate for one year but I'd never give up my membership in the USSFCU! Here's to at least 85 more years!!

My 85 year old mom was born on October 8, 1935... exactly when USSFCU was founded! How's that for karma!!

Happy anniversary United States Senate Federal Credit Union. I love my credit union and the great rates with Visa and car loans. Hoping to refinance my home soon with y'all. My birthday is October 8 and I'll be 57, to think that USSFCU was already 28 years old when I was born. That's amazing keep the good work up.

Thank to the entire USSFCU Team. My every interaction with all of you has been kind and efficient. I appreciate all our your efforts to make our days a little easier and brighter!

Congratulations to USSFCU for 85 years of service...I joined when the Credit Union was just a room in the basement of the Russell Building nearly 50 years ago.

Congratulations Senate Federal Credit Union on celebrating 85 years! I have been blessed to be a member since 1998! I also had the great honor and pleasure to support the Hart Branch of the USSFCU while an employee of the Senate Sergeant at Arms Operations Division! The Hart Branch of the USSFCU has the kindest, friendliest, most professional emplo...

I started in the Senate in 1977. I was in need of a car and had just a few hundred dollars to my name since coming from Minnesota. My boss told me about the Credit Union and walked me over to the Russell building and introduced me to Virginia P. where I joined and she gave me a loan for 1600.00 to buy a car that afternoon.

Congrats! USSFCU has been a reliable financial partner for my family saving me on fees and with low car and personal loan rates. On to the next 85 years!

Thank you for your wonderful service. I joined in 1989 when working for Senator Cochran.

Happy anniversary! Thank you for decades of superb service!

Glad to be part of this great anniversary!

Wishing you a most happy 85th Anniversary. You provide excellent service!

Congratulations to USSFCU on 85 years of service to the community.

Happy Anniversary to one of the best credit unions in the United States! Great for all banking needs.

Happy Anniversary!!! I have been a member since 1993...thank you for the excellent service throughout the years...I wouldn't trust anyone else with my money!

Happy Anniversary USSFCU, you have always been there for me! Your personalized businesses model is unprecedented exhibited by professionalism, kindness with a willingness to make your clients happy will keep us all coming back for years to come! Cheers to the next 85 years.

Happiest of anniversaries to a super credit union. You have given us kind, faithful service. May you be richly blessed in return.

Our family really appreciates all the services the credit union has to offer. We have financed (and re-financed) our mortgage, opened retirement accounts, and established our kids' first bank accounts with USSFCU. Thanks for all that you do!

Thank You for being there through all of these years.

Been a member for more than 50 years. Congratulations!

Happy Anniversary. Keep up the great Union benefits.

I've been a member since I first moved to the area and wouldn't change a thing!

When I became part of the Senate staff it was clear many new doors would open. One, to ussfcu, has remained so for many (about 50 or more) years, helping us through small and larger problems, We have used, enjoyed and appreciated their services.

I've enjoyed banking with USSFCU over the years! It was helpful for managing my money for everything from grad school to my first home to my kids!

A colleague told me she was getting a higher than average interest rate on her savings. I said, "That's the bank for me!"

Congratulations on 85 years. Opening a USSFCU account was one of the very first things I did when I started working on Capitol Hill 20 years ago and I?ve never looked back. It?s my primary bank account to this day. Best wishes for the next 85 years.

Happy 85th. I joined at age 16 in 1979 when I started what turned out to be a full career with the Senate. Things certainly have changed as USSEFCU grew and dropped the "E".

The USSFCU has always been there for me. The staff has shown nothing but professionalism.

Congratulations on 85 years of service to the Congressional community!

I had just graduated from college mid-year and moved to DC from the Midwest in January 1982. One of the first things I was told to do after starting work in the Senate was to open an account at the credit union. I did, and despite the fact that my boss lost in 1984, I have kept my account. The credit union helped me buy my first car. Lots of great ...

It?s a Happy Anniversary for all USSCU members thanks to the 85 years of wonderful and thoughtful service!!! I still love my classic checks! Happy Anniversary!

Happy 85th Anniversary USSFCU! I have been a member since 1983 and I appreciate the tremendous service that I have received throughout my 37 year membership. Keep up the great work!

Ever since I joined in 2011, I've experienced nothing but superior service from USSFCU! From teller assistance to phone conversations, I have never been disappointed. I've banked with many different institutions but I can never see myself leaving USSFCU. Thanks so much!

Happy 85th birthday to an incredible credit union who is always looking out to its members each and every year. Congratulations on this milestone!

Congratulations USSFC! Great customer service. A first class organization!

Very thankful of the stability provided by the USSFCU in these crazy times. Wishing you all safety and love and Happy Anniversary.

Congratulations USSFCU!!! I am a long time member, not only because it is convenient but because of the great service from Credit Union staff. Friendly efficient service from staff at the Hart, Alexandria and GAO locations always comes with a smile. I can't wait for the next annual meeting. Thanks and looking forward to another 85 years.

Thanks to the USSFCU I was able to receive a car loan after years of bad credit. This is a wonderful institution.

Happy Anniversary! Thank you for all that you do. We love our new pool!

I worked in the Senate for 23 years and it was so convenient to dash down to the Credit Union. Following that, I went to the State Department to work for a senior official. My contact from the Credit Union (Dana) was extraordinarily helpful in all things money-related for my "Principal" and for me. I couldn't have managed nearly as well as I did wi...

Thank you for serving the community. It is a pleasure and a joy to say I am a member.

Congratulations USSFCU! I appreciate your efforts to expand services and protect your membership here and abroad.

As a member for more than 40 years, I am thrilled that the USSFCU has reached this milestone, and I wish continued success in the next 85!!!

I have been a member for 40 years and it is one (1) of the best decisions I have ever made for my financial future. Greta, was my 1st teller and has continued to be a very supporting advisor throughout all these years..Happy Anniversary to all your members.

The USSFCU has ALWAYS given me and my family the best service for the last 20 years. I would never switch my banking to any place else. They?re the best!

Eighty-five years is about a lifetime. That's how long we can depend on USSFCU to be with us in good times and bad - for a lifetime.

Estoy muy contento ...

Congrats on making it to 85 and still giving the 3S: Stability, Security, Service and do add Satisfaction

Happy Anniversary! 85 years of helping people fulfill their financial goals, woohoo!!!

I just heard! Is it true? Eighty-five years... Whoop-de-do!

USSFCU has been a great resource for this service disabled Vet - thank you & happy anniversary!!!

Happy 85 Anniversary, I thank for the great job you guys always do, Thanks for allowing me to be part of your family.

Awesome to be celebrating my 25th year Silver anniversary with my credit union spouse the same week that USSFCU is celebrating 85. Much love and gratitude.

A credit union is the financial bestie for working people. I was employed as a credit union rep for 9 years. I promoted legislation to save credit unions as a Us Senate staff representative. Credit unions know who we are as people. I salute the services and dedication of 85 years non stop from the UNITED STATES SENATE FEDERAL CREDIT UNION. Please g...

It?s not just a corporate anniversary, it is an anniversary of a family and community that has grown stronger over the years. USSFCU started with a few but now there are many, not only in numbers but also in engagement, resources, and talents. Wishing you many more years of unparalleled service and success. Happy 85th anniversary USSFCU!

Congratulations from Michigan. Many more successful years ahead.

Happy Anniversary! Your dedicated customer service, both in person and by phone, is greatly appreciated. Thanks for doing it right!

Happy 85th anniversary USSFCU. Thank you for your service! I appreciate the credit union so much.

Congrats! Thanks for being my bank for 42 years!

Have been a happy USSFCU member since the 1980's!

Cheers to our Credit Union on its 85th! Proud to be a Member! Being part the USSFCU has special meaning for me because the first Federally-chartered credit union in the United States was in my hometown: Texarkana, Texas (Morris Sheppherd FCU, in 1934). In addition, a huge influence in my future life in Washington was Congressman Wright Patman, who ...

Happy anniversary USSFCU! I've been a member for 30 years (I'm pretty sure). It's been a great convenience having you in the building, and everyone is always super nice. Thank you!

Thank you for all of your great support over the years! It's nice to call and get similar voices, too, so that means you take care of your employees. Keep up the good work!

2 years ago my dream of owning my own pool came true! Thanks to USSFCU we were able to put in a pool, making my childhood dream come true! Today my children enjoy the pool all the time! Thank you and happy anniversary!!

Happy 85th Anniversary! I have been with the USSFCU since the 80's when I first started working as a teenager. Many loans, careers, military service and years later I am still here despite attempts by other institutions to gain my business. The USSFCU has always been fair, reasonable and looked out for my family and I.

It's been a pleasure banking you'll for nearly 20 years starting with a young savers account. You'll have great rates and the new learning tools are just amazing keep up the great work.

Happy Anniversary! I've been a member over two decades and appreciate the ease of banking and excellent customer service I?ve always received. Cheers to 85 more years!

USSFCU was my first bank - I can remember back in 1998 when I deposited my first check! I have continued to rely on USSFCU for all my banking needs throughout my life milestones and look forward to the future.

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