what is the best way to set aside money for my daughter?

Question

i have two older daughters now grown and gone but my youngest isn't even 4 yet.  by the time she reaches her age of majority, i'll be pushing 60 - given family  medical history, i have to face the fact that there's a good chance i'll cack it before she's old enough to be independent.  i want to secure her future but in a way that will keep it from the public eye - i don't want to bust my hump only to have her money nibbled away by taxes and user fees or, worse, outright theft and fraud.  i was thinking of investing it somehow and having it locked away to be released only upon reaching the age of 20 or when the trustees agree.  i've already set up an RESP but i also want her to have money that's hers - it would be dreadful if she (or her legal guardian) was forced to cash in her RESP just to meet day to day expenses.

what should i look at?  GICs?  mutual funds?  foreign currencies?  something else?

ideas?

Ben · Accepted Answer

To be honest the best thing you can do is set up a 529 college savings plan. It will ensure a college future for her if you pass away if she wishes to go. This is the best thing you can give her. With college costs rising, its unlikely anyone can afford to attend without college loans of some sort, so this would be a great help. As far as actual cash goes, you best bet would be to bit the bullet and simply place some money in a money market or 10 year CD. Sometimes you can consult with your bank and they can work on a custom savings plan. They might be able to work on a savings option that is not able to be accessed until she is 18 and still earns interest, while you place a certain amount in it each month. I dont see why a local credit union or community bank wouldnt. I know my credit union has. On another note, life insurance is always a good thing to look into.

okay, i see you added additional details...I am sorry i didnt realize you were in canada. A 529 is just a college savings plan, but if you have a similar account already open then you are set. Try to increase your life insurance and make her a sole beneficiary. Or if it will make others question, maybe keep your current policy and open another that is just her as a beneficiary. Set up a savings account in her name. I looked up some things and you can look into a TFSA, I believe that is unique to canada too. Place as much as you can afford in there and place here as the owner and beneficiary. Its tax exempt from what I read.

Fakeity · Answer

a ROTH IRA will grow tax free, if you make her the beneficiary. then maybe you can withdraw it when you retire, or when she reaches 25. I'm not sure about the laws but i do know ROTH IRA's grow tax free. Also Traditional IRA's do not grow tax free. If you are choosing an investment route, make sure to invest in a major index. those are usually great for long term investments. they grow very strong over a long time period. and from 4 to 20 is a long enough time for it to work out great. No one is going to steal your money unless you keep it in cash. If it is in the bank you will have the right to it. even if the bank goes out of business, the gov't will refund up to 250k of what was lost.

what is the best way to set aside money for my daughter?

2 Antworten