Lessons Learned From Investing for My Kids for 10 Years


Investing can do wonders if you have time and patience on your side. I’ve seen this firsthand with investing for my kids over the past decade.

As new parents, my wife and I heard over and over that the earlier you start investing, the better off you’ll be. And since we wanted the best for our kids, we started from the moment they were born.

Looking back 10 years later, I’m so glad we did. Here are 5 lessons I learned from investing for our kids over the last decade.

Lump Sum Investing Works

As soon as we got our kids’ social security numbers, we plunked down a big chunk of money for their future college expenses. We went with a 529 College Savings Account as we felt that was the best solution for our family.

We contributed $10,000 for my daughter’s college fund (in 2012) and $5,000 for my son’s college fund (in 2014). The difference in the contribution amount was due to us having more available liquid cash when my daughter was born.

Given the difference, we tried to catch up so the accounts would become more even over the years. That extra $5,000 and the two years of additional compound growth in the market has made that very difficult.

Here’s a rounded breakdown of their 529 accounts currently.

Daughter’s 529 Account (Age 10):

Balance:  $50,000
Principal:  $25,000
Earnings:  $25,000

Son’s 529 Account (Age 7):

Balance:  $35,000
Principal:  $20,000
Earnings:  $10,000

Both accounts are doing well with around a 10% rate of return.

By contributing a large amount in the beginning, we took advantage of some incredible market growth over the past decade. We continue to contribute monthly, but those initial contributions really got the ball rolling for us.

Automation Makes it Easy

After our initial lump sum deposits, automated contributions supported our kids’ account growth each month. We’ve budgeted a comfortable amount, set up recurring contributions and simply leave them alone.

As our income increased (or decreased) over the years, we would adjust our contributions accordingly.

While we loved investing for our kids’ future, we also wanted to make sure our future was taken care of first. We didn’t want to end up living in their basement in our retirement years!

We took advantage of our workplace 401ks, Roth IRAs and even Health Savings Accounts (HSA) for our comfortable future retirement.

By setting up automation to work for our kids’ future as well as our future, we ensured we’d hit both these family goals eventually.

Invest with Purpose

With the college funds building up steam and our retirement funds doing the same, I started thinking about other ways I could invest for my kids’ future. After all, if investing early works well for their future college expenses, why not other important future goals?

Home Down Payment

Starting with a generous $1,000 gift from their late-grandmother, I decided to start a UTMA brokerage account for both of my kids. These accounts are only a few years old at this point, but they are doing well.

Both accounts are closing in on $2,000 total and could serve as a house down payment fund in their mid 20s or early 30s. Hopefully with additional contributions, time and patience, it’ll help them each get a healthy home down payment so they don’t make the same first time homebuyer mistakes I made!


As the owner of a small family business, I have the opportunity to involve my kids in my work. They work as podcast co-hosts, photography talent and even help me by shooting videos.

With this support, I’ve been able to pay them a fair wage and I get to spend time with them doing work I love. This idea of family work-life integration is something that has been fun to explore lately.

The Roth IRA has been an excellent way for us to help our kids use their earned income from our time together to save for their retirement needs. This way I get to work with my kids and help them create a comfortable future.

Both of my kids have around $2,500 put away for retirement already!

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Compound Interest is Awesome

These three investing goals (college, future home and retirement) are many years or decades away. The longer we have until we actually need the money, the more compound interest can work its magic.

To demonstrate this magic, let’s use a compound interest calculator to give an educated estimate of where my kids’ accounts might end up. To keep the math simple, I’ll assume $50 monthly contributions going forward, a conservative 7% interest rate and use rounded numbers.

Daughter’s College (Target Date of 2030):  $92,000
Son’s College (Target Date of 2032):  $77,000
Daughter’s Home Down Payment (Target Date of 2040):  $32,000
Son’s Home Down Payment (Target Date of 2042):  $38,000
Daughter’s Retirement (Target Date of 2072):  $317,000
Son’s Retirement (Target Date of 2074):  $364,000

It’s amazing what compound interest can do over time if we automate contributions, stay patient and stay consistent.

It’s Important to Show Them the Way

With all three investing goals, I believe my kids will need even more money to make them a reality. But as parents, we can only take our kids so far.

There comes a point in time when we need to let them take the reins. And that’s why we’ve been having micro-conversations with our daughter and son about smart spending, saving, giving and investing.

Conversations like:

Smart Spending: The price of groceries at the store and why we decide to not buy something that doesn’t fit with our plan
Saving:  How we’re saving for our next family vacation
Giving: Why it’s important to give to your family, friends and neighbors in need
Investing:  How investing helps you hit really big goals

We’re hoping that these conversations will help our children understand the importance of being intentional with their money. Over time, through trial and error, we feel confident they’ll get there.

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Author is not a client of Personal Capital Advisors Corporation and is compensated as a freelance writer.

The content contained in this blog post is intended for general informational purposes only and is not meant to constitute legal, tax, accounting or investment advice. Compensation not to exceed $500. You should consult a qualified legal or tax professional regarding your specific situation. Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money. Any reference to the advisory services refers to Personal Capital Advisors Corporation, a subsidiary of Personal Capital. Personal Capital Advisors Corporation is an investment adviser registered with the Securities and Exchange Commission (SEC). Registration does not imply a certain level of skill or training nor does it imply endorsement by the SEC.

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