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Stock account for youth

Old 08-27-2015, 06:24 AM
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Default Stock account for youth

Looking for some guidance, Have a 13 yr. old that's dying to start a stock account ! Crazy but at 13 he has amassed almost 11G. He says its time to start working smarter not harder ! I told him he could start w 2 G of it . Where do you begin, legalities because of age, taxes, etc.also whats best one to use, scottrade, etrade, etc.? Thanks in advance !
Old 08-27-2015, 06:28 AM
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For taxes, take a look here: http://www.irs.gov/taxtopics/tc553.html

Should be good to start.
Old 08-27-2015, 06:29 AM
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fidelity..just remember he will be taxed at your rate
Old 08-27-2015, 06:30 AM
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I'm sure you'll get a variety of responses, but you may want to consider a Total Stock Market Index Fund at perhaps Vanguard or Fidelity. With that kind of money and time horizon, he'll be very happy down the road.
Old 08-27-2015, 06:34 AM
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Whats he want to do? day trade? long term? He cannot open his own account until he is 18- it will under your name. The above is also true in terms of Tax unless you two open a custodial account- then you would just have legal oversight. If he has a job I would go the IRA route right now instead of stocks, but to each his own.
Old 08-27-2015, 06:55 AM
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I wouldn't do it unless there's a way to prevent any sort of put/call options or margin trading.
Old 08-27-2015, 08:27 AM
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How does one amass 11g by 13? Just curious.

Get him the robinhood app. With only 2g in there you don't want to be messing around with trade fees. There are none with the app and he can do it on his phone.
Old 08-27-2015, 08:51 AM
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open up an account using the Uniform Gift to Minors Act??? Set it up so only you have authority to actually make trades though.
Old 08-27-2015, 09:39 AM
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Tell him to sit on his hands for a few years.
Old 08-27-2015, 09:43 AM
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Originally Posted by Boataholic View Post
open up an account using the Uniform Gift to Minors Act??? Set it up so only you have authority to actually make trades though.
Let him do it. If he messes up and losses all his money so be it he will learn life is tough and to do his research first.
Old 08-27-2015, 10:57 AM
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You should look at setting up a simple trust, with you as the trustee. Thinking long term, the assests are shielded, be it divorce, judgement, etc. While not tax favorable, if he ends up buying and holding, taxes may be of little concern. He can always request an invasion of principal at any point for any reason.

TD Ameritrade, etc., should be able to assist you.
Old 08-27-2015, 11:16 AM
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I bought my first stocks at 12 with the help of my parents and the encouragement of their stockbroker at the time. He was not a very good broker but was able to explain some basics. Sometimes it is easier to learn from a stranger than a parent. My first pick was PanAm which immediately went in the crapper. Great lesson. Second was General Bankshares which was also a disaster. These taught me not to take advice lightly.
Old 08-27-2015, 11:22 AM
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No but seriously how does one accrue 11 g's at 13? That is impressive. Do some math and show him the power of compounding interest. He could have one hell of a head start on retirement!
Old 08-27-2015, 07:21 PM
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I'd vote for TD Ameritrade. You can limit the account to what types of trades are available aka no margin etc. and the think or swim platform is quite powerful. Maybe he can even learn to program for it as you can create your own signals, systems and also back test.

If you create a free account at dough.com then click their link to sign up for the account you will get $7 trades on common stock and $1.50 per option contract.

A trust might be a good idea. You'll want a trust lawyer to set that up.

Had a terrible experience with fidelity. They screwed up an account I got in on an IPO with and stock was tanking I couldn't trade and their phones were on hold. Lost a fair percentage due to them and they wouldn't even make it up by comping commissions.
Old 08-27-2015, 08:32 PM
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Originally Posted by ryan darrow View Post
How does one amass 11g by 13? Just curious.
Bar Mitzvah .....
Old 08-28-2015, 03:48 AM
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Blue Chips. Oil. Merrill Lynch. Get him to keep adding to it. Good for him.
Old 08-28-2015, 09:47 AM
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Tx for all the great responses ! To answer the questions about where the money came from. It came from a variety of places, including saving birthday money, cutting lawns, a cool little job dogsitting for weekends for neighbors,Heck he even got gift cards for Bday, Xmas, to places like Target, Walmart, and sold them to his mom and me for cash since there wasn't anything he really wanted to buy ! He's pretty smart w the money. He learned a few years back when we made him buy his own video games etc with his money, in about 6 months for his birthday I gave him the money back that he has been spending, It was like 250 bucks ! He realized he didnt REALLY want them games. He wants to buy and hold basically for the long term, I told him that I think dividend payers and things that he believes in is where to put money. He says Nike, Disney, are good, and things like Proctor and Gamble, I didnt want to let him down and just say no, so here we are , and there are some smart guys on this forum. Most people that have a boat have a career, good job , business, etc . Thanks again . I'll be researching the recomendations !
Old 08-28-2015, 03:04 PM
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Originally Posted by 4 Paws View Post
I'm sure you'll get a variety of responses, but you may want to consider a Total Stock Market Index Fund at perhaps Vanguard or Fidelity. With that kind of money and time horizon, he'll be very happy down the road.
This is what I would want a child in. I don't think it would be proper to pick individual stocks(gamble) at his age.
Old 08-28-2015, 03:18 PM
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Originally Posted by ndb8fxe View Post
This is what I would want a child in. I don't think it would be proper to pick individual stocks(gamble) at his age.
Gambling with Proctor gamble?
Old 08-28-2015, 03:30 PM
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Check with Fidelity. I think they can set it up as a collage fund and get around some/all of the taxes.

With 2K I would turn him loose, my guess he could surprise all of us. I would give him guidance putting too much in any one stock. he could end up being the next Trump.


Doug

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