It's normal for parents to worry about their children's financial future. After all, it is most parents' dream that even without them in the future, their kids will be able to get by and be financially secured and independent. Responsible parents build the foundation to this security early on and below are three options where you can explore investing in your children's future.
1) Healthcare Stocks
According to Motley Fool, buying healthcare stocks as gifts for your children work very well for long-term investments, but you have to be careful about the type of stocks you're going to venture into. Be sure to know which companies are more stable and be smart dividends and payouts. Also, be aware of how flexible the stocks are, especially with the changing economic landscape.
Among current healthcare companies doing well on stocks include AstraZeneca (NYSE:AZN), Celgene (NASDAQ:CELG), Alexion Pharmaceuticals (NASDAQ:ALXN), according to the Motley Fool experts. These are some of the most profitable, high growth companies, with proven track record and vision.
2) Educational Fund
For parents or grandparents who would like to bestow gifts to their children or grandchildren, but who would still like some control over it for a period of time, then putting investments in a form of Grantor Trust would be feasible. According to CBS News, this type of trust fund ensures how the child's money is evenly used, so that nothing is wasted. Large expenses such as a college education may be guaranteed with a Grantor Trust. The grantor, who can make tax-free contributions to the trust fund, nominates a trustee for this. The trustee will oversee that every dollar is accounted for at the event of the grantor's demise.
You may also open a 529 Account for the child's college expenses. These are state sponsored plans over which you may have full control of. Should the fund grow as you make your contribution, this will remain tax-free. If your child happens to receive scholarship in college, the 529 Account will be transferable to your other children, according to Time Magazine.
3) UGMA and UTMA Accounts
Otherwise known as the Uniform Gifts to Minors Act (UGMA) and Uniform Transfers to Minors Act (UTMA), these are established in many states and allow for the transfer of a parents' assets to someone who is below 18-years-old or a minor, according to Franklin Templeton Investments. The UGMA account covers insurance and bank assets, while the UTMA account covers real estate and other property assets.
