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It is not like winning the lottery, but it is creating a long-term financial plan for the benefit of the person you love most in life: your children. And achieving it is easier than it seems.
Saving is the dream of many and the reality of few, but what would happen if we instill this practical and beneficial idea in children? And it’s more possible and achievable than you think: if you can save just $25 a day, you’ll make $1 million.
If your eyes have already shone, then it is not for less. Although not everything is overnight and you have to follow certain strategies to achieve it.
That’s why we’re going to share with you how your child can achieve that dream savings of $1 million dollars and the most wonderful thing is that it would be tax-free.
These are the recommendations that the financial experts of USA Today give to those American parents who want their children to be financially successful.
A Roth IRA for the minor
It’s never too late to start early. You can open a Roth IRA for him to manage his income, which can include summer jobs, part-time jobs, or light jobs like mowing the lawn (family businesses count, too).
The account must be under the supervision of an adult. You must remember that there are limits regarding the contributions they make: for 2021, this is a maximum of $6,000 dollars.
According to the USA Today report, the child can contribute only $25 dollars for five days a week, which will give a total of $125 dollars a week, $500 dollars a month, $6,000 dollars a year.
Together buy shares
You have to invest so that income grows, it is the golden rule in finance. USA Today recommends doing this by buying stock in companies that are growing.
The benefits are that the shares will increase in value more and more and although they are usually not cheap at all, they will give your child excellent results.
Another advantage is that you can sell them at a higher price than they cost and then acquire better shares.
Matter of time
Once step 1 and step 2 are done, it’s time to wait. When your son is 59 1/2 years old, if you follow these strategies, he will have his million dollars. Plus, by the time he’s this age, he’ll be able to take the money out tax-free.
It is not like winning the lottery, but it is creating a long-term financial plan for the benefit of those you love most in life.