Dawsyn Pouncil is well on its way to becoming a millionaire by the age of 16. And she is only 18 months old.
All of this is thanks to her mother Dominique Broadway, an award-winning financial planner, CEO, and founder of Finances De · mys · tified.
“We’re trying to bet [Dawsyn] for financial success in life, ”says Broadway. “We definitely want her to feel financially empowered and never really have to worry about money if she does some of the things we put in place.”
These things include a Roth IRA, a depository savings account, and a depository investment account. Together, Dawsyn has amassed just over $ 50,000, with all of that money bringing in compound interest.
Here’s how Broadway is investing in your daughter’s future and how you can do the same – whether you have $ 5 or $ 50,000.
The story behind the $ 50,000 investment portfolio
At 18 months of age, Dawsyn’s investment portfolio looks like this:
She has a regular savings account at a bank, where she receives interest on the cash deposit. She has a custody account managed by the financial services company Acorns that pays regular monthly contributions. She also has a small Roth IRA to which she can contribute based on her “income” from her work as a brand ambassador for Finances De · mys · tiified.
Dominique and her husband started Dawsyn’s investment portfolio right after they were born. Her initial contribution was around $ 4,500, followed by regular contributions of at least $ 2,000 per month, sometimes more. Most of the money is currently in Dawsyn’s investment accounts in various stocks and has hit $ 50,000 in 18 months.
You don’t need a lot of money to start investing. It’s better to start early with what you have and let your money grow over time with compound interest.
Because Dawsyn is so young, her investment portfolio can afford to be aggressive, with high-risk, high-yielding assets like stocks, international stocks, and aggressive mutual funds. If Dominique continues her regular $ 2,000 per month contributions and enjoys a similar return of 10%, Dawsyn’s portfolio will be worth $ 1.1 million by the age of 16 and will generate a high return, ”says Broadway .
When asked why she set up all of this for her daughter, Broadway has a simple answer: “Why not? Why don’t you want to prepare your child for financial success? “
Broadway remembers how her grandfather started saving up for her when she got her Social Security number. He invested in Series EE Bonds, a type of savings bond made up of US Treasuries, the value of which will at least double during its 20-year term from birth on Broadway to graduation. Because of his investments, which started small but gradually increased as his income allowed, Broadway finished her bachelor’s degree completely debt free.
“I realized how beneficial it was, how it made me invest in real estate earlier and do these other things without all that additional financial pressure,” says Broadway. “We want to do the same for our children, don’t we? We want them to be financially empowered so that they don’t have to worry or stress about money, so that they can really go out and do what they are here to do. “
That’s why Broadway built its business around helping people learn finance and build wealth. “I dedicate my life to helping people, especially many people of color, who do not have access to this information, to get access to this information, as this can change the financial situation for generations.”
How to set up a stock portfolio for a child
Here are three things Dominique does to provide for her daughter’s financial future and to give her the knowledge she needs to be financially successful. And you can do the same no matter how little or how much money you have on hand.
1. Open these three accounts
Broadway recommends three types of accounts for your child.
“You don’t have to do all three,” advises Broadway. “Choose one that is right for you, your financial situation, and the goals you have for your family and children.”
Depot savings account.
A savings account is the easiest to set up and perfect for anyone who isn’t ready to invest but wants to save money for their kids, says Broadway. It can be opened with most banks or credit unions and allows you to hold and manage money for your child until they reach old age.
Another option is a custody account, which is similar to a custody savings account in that an adult manages the account on behalf of a minor. “The only difference is that you can actually invest money for your child in this custody account,” says Broadway. And the barrier to entry is lower than many people assume. “I don’t feel like you need a lot of money,” she adds. “You can literally invest for $ 5.”
529 college savings plan.
For parents with college children, a 529 college savings plan is a great option to save for your child’s education. With a 529 plan, you contribute a certain amount of money to invest in mutual funds or exchange traded funds, with the investment plan being tailored to the target date your child will attend college. In some states, you can also use these funds for private schooling.
One of the main draws of a 529 plan is the tax benefits, which can include both state and state tax write-offs and credits. Different states offer different 529 plans, so check the details of your state’s plans on the official College Savings Plans Network website. Some state’s 529 plans don’t even require the owner or beneficiary to be a resident.
2. Start investing early
“I keep telling people that the sooner you start saving, the less you have to save because of the power of compound interest,” says Broadway. “So start small. Don’t feel like you must have millions and billions and trillions of dollars. $ 10 a week, $ 10 a month, just do something. “
You can sign up for a high-yield savings account with no minimum deposit and start earning interest on your money instantly. You can also open an investment account so that your money can grow faster. “You could start investing for yourself or your children for as little as $ 5,” says Broadway.
If you don’t currently have any children but want to build a savings portfolio for future children, there are options too. Although you cannot open a savings or investment account in your child’s name unless they have a social security number, you can open a special savings account under your own name to set aside that money for future children.
You can also open a 529 plan for another child, such as a niece or nephew, Broadway says. If you later have children of your own, you can change the beneficiary.
However you choose to invest, “don’t hesitate and don’t feel like you don’t have enough money,” says Broadway. “Just start with what you can.”
3. Talk to your children about money and let them be part of the process
“My family always talked about money,” says Broadway. “Not in a negative sense. And always very optimistic, positive and just shows me that money is part of our everyday life. “
She wants to do the same with her daughter. “It’s important to have these conversations very early,” she says. “We want finance and investing to become daily talking points in our home.”
Another thing she plans when her daughter gets older is to let her be part of the investment process. “One of the things we plan to do with our daughter is to make sure she has a share in these investments,” says Broadway. “As we pick stocks, [we] Permit she Select the stocks. ”
For parents looking for ways to initiate a conversation about investing with their children, Broadway recommends looking at companies that their children already use and love. “It’s the best way to get your kids interested, potentially investing, and owning,” she says.
“I think that as parents we should talk more about property with our children,” she adds.
Broadway believes that being a partner in a company has power rather than just being a consumer, and that is what she wants to teach her daughter as quickly as possible.