FOUR STEPS TO MAKE YOUR CHILD A MILLIONAIRE
Updated: Feb 26
Yes, you read that correctly. Your child can in fact become a millionaire!
And we are going to give you the steps to do it!
Did you know that you can open a Roth IRA for your child? A Roth IRA is a unique type of retirement account that allows your earnings to grow tax free!
For example, let’s say your 7 year old child contributes $100.00 per month until he or she turns 18. At age 18, assuming an annual rate of 10%, your child would have $22,572.21. Now, assuming that your 18 year old never contributes another dime into his or her Roth IRA, at the age of retirement (let’s use age 60) he or she would have $1,233,426.00 !
Through your due diligence, your child would become a millionaire! This is the beauty of investing!
You’re probably thinking... that seems too easy!
So what’s the catch? In order to open a Roth IRA, your children must first have earned income. Let’s walk you through the steps!
1. HIRE YOUR KIDS
There are multiple ways that you can hire your child. Below are some examples of tasks that your child can do to earn income:
Dog walking
Babysitting
Selling lemonade
Car Washing
Yard Service
If you have a business, you can also hire them to do:
Bookkeeping
Social media management
Web design
Filing
Document shredding
Clean rental properties
Other administrative tasks
Modeling for your marketing and advertising
Just keep in mind that you must pay them a fair and reasonable wage. In other words, don’t pay them $200.00 for stapling papers.
2. OPEN A ROTH IRA
As a parent, you can open a custodial Roth IRA on behalf of your child. You can do this easily through companies such as Fidelity, Vanguard, or Charles Swaab!
3. BEGIN CONTRIBUTING FUNDS & INVESTING
Unfortunately most people think that once you deposit funds into a Roth IRA that the funds are automatically invested and that is NOT the case. After you transfer funds from your checking or savings account to your Roth IRA, you must now select your investments, be it stocks, index funds, ETFs etc.
4. REAP THE BENEFITS OF COMPOUND INTEREST
Based on the above example and assuming a conservative 10% rate of return, your child could earn $1,233,426.00 at age 60 as a result of compound interest. But imagine if he or she decided to continue contributing even more of their income as they embark upon their professional career? They would have even more money!
This is why teaching your child the importance of investing EARLY is so important and why Stock Market Investing with Wallstreet Junior is the perfect resource to give your child or teen the knowledge to begin their investing journey!
Teach your kids how to invest in the stock market by enrolling them now and change your child’s financial future!
View all of our financial education resources for kids and teens here.
If your school or group is looking for a finance curriculum to teach your students about how to manage money, start here to learn more on how to bring KidVestors to your classrooms!
Parents, teach your kids money and make money conversations normal in your household by visiting here.