Best for grandchildren

Many years ago I had turned to Clarks website to direct me in investing. What they suggested has done well so I figured where best to turn regarding my granddaughters money. I have 3 granddaughters (ages 9,11,13) whom I deposit money instead of gifts as they have enough stuff into a savings account. However although it is under their name , mine is also on the account and I am the one who has to claim the interest for tax purposes. I am looking for something to put their money into which can be put into their name and will grow. They each have a little over $1000. Any ideas?

Have you considered 529’s?

Hello Melg. I was faced with the same objective and went several rounds before coming up with my decision. 529’s are great, but they have their own guidelines, including that the funds must be used for education. Some of the online discount brokers now offer kiddie accounts; they allow money to be added over time in small amounts. My decision is easy: I opened a separate brokerage acct at Fidelity in my name, to which I can add cash, ETFs, or stocks. The account is in my name, but I do not trade in that account; I buy quality long term investments for growth. Since no trading occurs, no taxes are incurred. For the grandchild to (eventually) receive the money, I simply designated the grandchild as the primary beneficiary. Easy.

How does it get handled in the unlikely event the grandchild becomes a beneficiary before being of age?

I never thought of that. I suppose it goes in their name should I die

Hmm, may have to look into that, thanks

Since they have a specific use- education such as college and I don’t see my granddaughters going to college I would rather not

Blockquoter kiddie accounts; Since no trading occurs, no taxes are incurred.> Blockquote

A Kiddie account is a good idea.To clarify this is my understanding on how Kiddie accounts are taxed. There is taxation on the interest, dividends or capital gains similar to any other brokerage account. But the taxation on a Kiddie is as follows for 2025: first $1,350 of the unearned income is tax-free, the next $1,350 is taxed at the child’s own tax rate and above $2,600 is taxed at the parents (grandparent) marginal tax rate. So Melg’s grandchildren would not earn enough to be taxed unless the accounts were significantly larger.