index fund for a child?

[leigh53168]

TRowe Price's minumum on a custodial account (minor child as owner/parent as custodian) is $1k this can be waived if you set up asset builder ($50 a month systematically from checking account) There is a $10 small account fee if below $500. But you can control when to stop/restart asset builder. You're not limited in fund choices-this pertains to most of their funds.

Vanguard just changed their fee structure so look into how to waive annual fees if you go that way.

[Ini_g]

Well, if you a have an amount of money, why don´t split it?.

One part playing safe, and another one, maybe a little one, playing with risk?, And then you can see how the things are going.

[EverydayFinance]

I think trying to minimize volatility and hedge risk with such a long time horizon is too conservative. Sure, it's for you kid, so you want to be prudent. However, I have to beg to differ with the S&P500 losing money over any 20 year time period. Perhaps if you timed it perfectly prior to the depression and ended at a trough, you might get a lousy return, but I'm pretty sure there is no random 20 year period in US history where stocks have lost money. Generally, it's 8-10%/annum over any period that long.

Balanced funds are for people with shorter time horizons, perhaps retirees. I'd recommend going with a nice low fee Vanguard S&P index fund (expense ratio's like .1%). The balanced funds have lower long-term returns and higher fees. Actively managed funds typically have fees in excess of 1% and they generally don't beat the index anyway. Over such a long horizon, fees become increasingly important.

Personally, I've gone even more aggressively for my kids' funds with some international equity exposure. 18 years is a long time.

Dan at everydayfinance