How to Invest in Mutual Funds for Kids

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Before investing in mutual funds for kids, decide what the money is being saved for, because money for college can be put aside without being taxed. Find out how to buy mutual funds for a child's nest egg in the same way that mutual funds are normally bought, with help from a portfolio manager in this free video on personal finance and money management.

Part of the Video Series: Stocks & Bonds
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Video Transcript

OK, so you're wondering, how do we invest in mutual funds for kids. Well, the first question would be what are you saving for? There are lots of different programs out there. If it's for, say, college funding. If you're saving for college, there are some tax beneficial accounts called 529 plans, and you can put money aside in those plans and you won't be paying tax on the interest as it accrues, as it goes up in value. If it's mutual funds that you want for your child for just long-term, just so they have the nest egg, you would really just buy them the same way you would buy them for yourself. Have a longterm outlook on it. Look for good, solid, mutual funds that don't have very high expenses. Maybe a well diversified so you're not always watching them. They're diversified across a lot of different areas of the market, and that way, you'll get the broadest scope. because industries change all the time; oil can be hot. metals can be hot, different services can go up, we can have a tech bubble, those type of things. So make sure that your mutual fund is actually covering all those bases and is something that, again, over time you're not going to accrue a lot of expenses on it. So, really when you're investing for kids, with the exception of some of the college saving programs, you're going to invest the same way you would for yourself, just maybe look at an even longer term outlook.


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