The Best Custodial Investment Accounts for Your Child's Future

Forbes Advisor has identified the best custodial accounts on the market today. A custodial account is a special type of savings or investment account that one person opens for the financial benefit of another. In other words, once you open a custodial account, you no longer have unlimited control over the assets in that account. The money in the account belongs to the beneficiary, usually a child, and is managed by the custodian, typically a parent or guardian.

The best custodial accounts have low fees, are accessible, and offer a user-friendly platform for parents/guardians to invest funds on behalf of their children. These accounts provide a great opportunity for parents to start saving and investing for their child's future. By opening a custodial investment account, parents can introduce their children to the world of finance and teach them valuable lessons about saving and investing early on.

One popular option for custodial accounts is a custodial IRA. A custodial IRA allows the account holder, in this case, your child, to contribute after-tax dollars toward retirement. For the most part, the rules and regulations surrounding custodial IRAs are similar to those of traditional IRAs. However, the custodian has control over the investments until the child reaches the age of majority.

If you want to help your child start investing early, you have options. Opening a brokerage account for a child is a great way to introduce them to the world of investing. When you invest for your child in a brokerage account in your name, you can access funds at any point in time. You can also choose when or if to transfer ownership of the account to your child once they reach the age of majority.

When choosing a custodial investment account for your child, it's important to consider your savings goals, investing style, and account ownership wishes. Different custodial accounts offer different investment options, such as stocks, bonds, mutual funds, or ETFs. It's important to choose an account that aligns with your investment preferences and risk tolerance.

In summary, custodial investment accounts provide a valuable opportunity for parents to save and invest for their child's future. The best custodial accounts offer low fees, accessibility, and a user-friendly platform for parents/guardians to manage investments on behalf of their children. Whether you choose a custodial IRA or a brokerage account, investing early can set your child up for financial success in the long run.