My recent post about opening IRAs for your children has landed me lots of questions! I am so pleased that people are connecting to this!
One question in particular bears some clearing up. An old colleague of mine wrote me on Facebook saying that he uses 529s to save for his kids. These are awesome investment tools too but for a very different purpose than the IRA I proposed. So let me specify the difference:
We have both 529s and self-directed Roth IRAs for our children. I will share my 529 philosophy and hacks in another blog post. For now, what is worth noting is that we don’t make our children contribute to their own 529 plans. They have not expressed a desire to go to college yet. They are 3 and 5 years old. They barely know what college is. College is still OUR dream for them and not yet their own. Therefore I think it only fair that we pay into that dream while they are still so young.
However, they ARE expected to contribute to their IRA with their own income and labor. This is what the government mandates. They must have income to have an IRA and they must earn that income in my house. I specified how in my previous post.
I will also make it a point to write about how (and why) I manage my own self-directed IRA. Please do stay tuned for that and as always, if you’d like email updates, clickety click below!