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Open an IRA
Make the fullest possible use of tax-deferred accounts like Individual Retirement Accounts.
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Consider Investing
Consider investing in stocks or index shares that concentrate on growth, because they tend to pay low or zero dividends. The idea is that you build wealth through stock appreciation rather than accumulated dividends, and stock appreciation, unlike a fat AGI, is not taxed. With a stock that appreciates, but pays no dividend, Uncle Sam isn't interested until you trigger a capital gain by selling.
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Any adult can open a custodial account for a child or grandchild. All
you need is the child's name, address, and social security number. Once
the account is open, you can deposit money into the child's account; however,
until the child is legally an adult, only the custodian can access the
account and make investment decisions. Neither the child nor any other
person can change the investments or remove cash, though anyone with the
account number can add cash to the account.
You (as the custodian) may be able to remove money from the account for
expenditures in the interests of the child, for example to pay educational
expenses. But you cannot use the account for your own purposes, or for
any purpose not sanctioned by state law. |
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