Start Early - Why Investment Accounts for Kids Matter
Raising financially secure kids starts earlier than most parents think. While it’s common to focus on budgeting or allowance tips, one of the most impactful moves you can make is opening a custodial investment account for your child — and starting small, but soon.
Unlike traditional savings accounts, a UTMA (Uniform Transfers to Minors Act) account lets you invest on your child’s behalf. That means your money has the potential to grow through the power of compounding, even if you’re only contributing $25 a month. Over 10 to 15 years, those contributions can add up to meaningful support for their future.
What makes UTMA accounts stand out is flexibility. Unlike 529 plans, which are designed for education, UTMA funds can be used for almost anything that benefits your child — from a first car or a coding bootcamp, to a down payment on a home someday. They’re investment accounts, not bank deposits, so while the value may go up and down, the long-term trend for diversified investing has historically outpaced cash savings.
The best part? You don’t need to be perfect. Just consistent. The earlier you start, the more time you give those investments to grow.
Don't just take our word for it
Hear what trusted money experts say about why UTMA and UGMA accounts can be a smart way to invest for a child’s future.
There are some tax advantages to using UGMA and UTMA accounts… Since they’re in your child’s name, the accounts will be taxed according to their tax bracket… There are no contribution limits on UGMA and UTMA accounts.
Dave Ramsey
Personal Finance Expert
Read
Tap to flip back
Investing for your kid’s future
Dave Ramsey
Personal Finance Expert
Tap for more
...you could consider opening an account where you can dive deeper with the kids by your side. The easiest way to do so is to open a custodial account, known as an UGMA ... or UTMA ... account.
Jill Schlesinger
Emmy winning Business Analyst
Read
Tap to flip back
Straightforward “starter” investing account for kids
JILL SCHLESINGER
Emmy winning Business Analyst
Tap for more
You can give children money that can accumulate somewhat tax-free over time... I love them (UTMAs) because they were like, trusts that you didn't need lawyers to create.... I think it's one of the better tax breaks around though. I know hunting for tax breaks may not sound very exciting, but that's how you take care of your family.
Jim Cramer
CNBC Host
Watch
Tap to flip back
Give children money that can accumulate over time
Jim Cramer
CNBC Host
Tap for more
