Why Is A 529 Better Than A Brokerage Account?

If your kid doesn’t go to school you can fully fund your grandkids in a k-12 school .

I put 35$ a week into my now 4 year old daughter's 529 account for college and have since she was born

And 10$ a week into an UTMA account along with all her birthday proceeds and other cash from family members for her to later use for a down payment for a home or possibly purchase a car when she turns 18.

I plan to give her access to the UTMA account at 13 years old to start trading stocks on her own behalf to teach her how money works.

The idea is that when she turns 18 she feels comfortable and independent I hope at 15 she starts her own job and putting money into these accounts on her own behalf because she will see what a simple 45$ a week will grow into over an 18 year period.

Arming our next generation with the knowledge and understanding of money should be part of your goals as being a parent. My question is what is the best age to start transferring ownership of these accounts to let them start making trades on there own behalf.

For the "greatest country " in the world , education should be free and considered a basic human right just like healthcare and just like most countries in Europe where health and education is 💯 free .

What was the point of the first 50 second of the video?

What if my kid goes to study in Australia

Imagine your kid started college in August of 2008.

I bought the Florida prepaid college program just after his birth. I elected to do the one time payment right after my son was born...he is a senior in highscool now.
Without looking it up, I believe I paid around $12,000 for the 4 year degree.program.
I heard something about over payments and refunds in Florida. If you have Knowledge on this, I would love to hear what you have to say about it. Thanks and blue skys.

Now days, those coming from college are mentally disabled. I would just do a brokerage.

It seems he is against day trading and swing trade some people make enough where they don't have to work, I think you have to have multiple investments to play it safe. Long term or index funds, ira, swing trade for short term

Either the parent/ grandparent etc owns it or the kid owns it. It depends on how you title it. Better to have it in the kids name especially in case you are sued, get divorced, or die before the kid is ready for college.

A great tax advantage option is to simply move money from your Brokerage account into a 529, at the time it is needed, and they make the college payment, and thus taking the deduction and avoiding the taxes.

What happens if the 529 is never used for school?

For those like myself, let me fill you in on what dave didn’t answer...
In the event your child doesn’t go to college, and you don’t have another child, but you want the money you saved, here’s your option..
Penalty Withdrawal: you get a 10% penalty on the growth you earned. If you out in 100k, and you grew an additional 30k, you only owe 10% or 3k penalty to the government.. you’re welcome

But a brokerage account is so much more liquid and your child can use it for a down payment on a home, car, wedding, starting a business, or any other expense in their 20s if they don’t go to college. No one is spending tens of thousands of dollars on trade school like a traditional university. Plus I don’t like his comment on “you shouldn’t be trading single stocks inside of your kids college fund,” when the listener did not say that at all. He could simply invest in an total stock market index fund and get an average return of 10% a year for 18 years and then decide. I understand that 529s are tax advantaged, but the restrictions on them outweigh the benefits in my opinion. Don’t let the tax tail wag the investment dog.

Does anyone know what you are eligible to do with the money if your children are grown and the 529 never got used? No grandchildren either. I feel like everyone is so quick to say that people are trying to get these questions answered just because they don’t want to save. Here I am needing an answer because I’m actually in that situation.

"I'm not sure if my kids are going to go to college, so I'm not going to plan for it at all" That's like saying "Well I'm not sure if I'm going to get in a car accident so I'm not going to buy car insurance or wear a seatbelt."

What was the point of the first 52 seconds of the phone call?

As a brother in Christ I love Dave Ramsey, but why save for kids to be taught by Marxist?? Start them a custodian Roth IRA tell them to become entrepreneurs

One of the best informational vids i watched today

bad advice and miss leading..

If your kids do not go to college, you can roll it over to a retirement account 😉

One thing to remember with a 529 is that you own it. You're only setting the beneficiary. If you do a UTMA or UGMA you do not own the account. You are merely a custodian for what is now your children's money.

Everybody talks about going to college until you say 529 then it's all "what if they don't go to school?".

Dave should read the book where are all the clues yatchs. The mutual fund managers are showing up to work in a long car I bet.

Comment

We chose not to go with a 529 or ugma account for college. We went the brokerage account funds from year 1-18. We were able to grow that fund to 180K, but we maintained control(I am a control enthusiast). Anyway, we are putting her through college with no loans because we had that 18 year plan. The biggest reason that we have that fund for her college is because we actually funded the account....(and the 12% average growth for 18 years did not hurt).

And if they don't go to college, or any school. You withdraw it, than you'll pay taxes on it.

Did I hear him right? Did Dave say that if your child gets a scholarship (ex. $10,000) you can take out the equivalent of that scholarship ($10,000) tax-free? Not sure I knew that. Or, did I hear him wrong?

In case the child does not study, the 529 money could be taken out of the account for other non-educational purposes? We Will need to pay taxes on them but, is it possible?

Every child doesn’t want to go to college or trade school. Very hard, but it’s a personal decision.