IRA for teenager

[kv968]

To update the conversation, we did our taxes on Thursday. DD is eligible to contribute $1,686 to a Roth for 2012! I just printed the application form for Vanguard (it can't be done online) and filled it out. We're going with the Target Fund, and yes, I gave her a lesson explaining what a Target fund is and the pros and cons of using one. I'll mail everything off on Monday so they will have it in plenty of time before the 4/15 deadline.

This is her first real investment. Pretty exciting. As long as she keeps contributing for the next 40-some years, she'll be all set.

Congrats. You're definitely setting her on her way to a secure future. And even though the target fund is really the one she can get into at Vanguard besides the STAR Fund with less than $3k, I think it's a good choice regardless.

I'm sure she'll keep contributing over the years but even if she doesn't, compounded at even 7% annually that $1686 alone will be ~$25k in 40 years or almost $50k in 50. Ya gotta love compounding and starting young. Good job.

[disneysteve]

I'm sure she'll keep contributing over the years but even if she doesn't, compounded at even 7% annually that $1686 alone will be ~$25k in 40 years or almost $50k in 50. Ya gotta love compounding and starting young. Good job.

I used an onine calculator to show her how this money would grow and also where she'd end up if she just put the same $1,686 in every year until age 65 ($661,000). I also explained that once she has a real job, she'll up that to $5,500 or whatever the limit is then and have far more, like in the $2 million range.

[Mr Nice Guy]

Very cool.

Steve how do you talk to your daughter about saving while still being a kid and having fun? Does she seem excited about her Roth? Just curious.