Start a Young Investor Off Right

W

wave

Got kids and $1000? I am setting this up for my kids as they approach eight years old.

Schwab dropped the minimums for its index funds to $100 apiece.

$1000 Investment into a diversified portfolio of funds
Schwab S&P 500 Index (SWPPX) - $300
Schwab Total Bond Market (SWLBX) - $300
Schwab International Index (SWISX) - $200
Schwab Small-Cap Index (SWSSX) - $200

http://www.younginvestorfund.com/
 
Lol, 10% expense ratio. I would rather replicate the fund myself using their top 10 holdings list. Or buy it all in Verizon stock and tuck it away until they graduate high school.
 
Wave,

Do your own due diligence but I see no reason to have almost a third of the money in bonds. You want capital appreciation and the longer the time until the money is needed, the better. When they get closer to using the money you can become more conservative. Just something to think about.

BM
 
Quote from wave:

Got kids and $1000? I am setting this up for my kids as they approach eight years old.

Schwab dropped the minimums for its index funds to $100 apiece.

$1000 Investment into a diversified portfolio of funds
Schwab S&P 500 Index (SWPPX) - $300
Schwab Total Bond Market (SWLBX) - $300
Schwab International Index (SWISX) - $200
Schwab Small-Cap Index (SWSSX) - $200

http://www.younginvestorfund.com/
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Much too conservative for someone who presumably wouldn't need the money for, minimally, 10 years if they're financing their own college (hopefully no?), and so on.
Small cap should be 300 (+100).
Bonds 150 (-150).
As an inflation hedge, gold or related (perhaps more general precious metals fund) should be 50.

Eventually, the S&P part should be "disintermediated", as in directly invested rather than through a fund, in high-yield stable stocks. If you were doing something like that today, two I'd look at would be SPH and SSS. Both highly recession-resistant (not immune, just resistant) and high payers.
Throw in a good utility, and you're set.
 
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