Investing In Your Child’s Future

Featuring Ben Howe, Trust Officer, C&N’s Trust and Financial Management Group

by Citizens & Northern – January 3, 2018

For many parents and grandparents, investing in their children’s future is a high priority. But it can be tough to figure out the best time and the best way to get started. Ben Howe, from C&N’s Trust and Financial Management Group, took the time to share some of his expertise by answering these 6 common questions.

When should I start?
As soon as it’s feasible. It’s important to balance meeting your present needs and meeting your own needs of the future with investing in your children’s or grandchildren’s future. The more time you allow for the savings to grow and the more you can put away early, the more potential those investments have to grow.

Are savings bonds still a viable option?
Savings bonds are still used, but to a much lesser degree than in years past. This is for several reasons: 1) interest rates are at historic lows, making them a less attractive investment option; 2) they are no longer available at your local bank branch. You have to set up an account at and purchase them online; 3) there’s a wider range of more competitive offerings available.

What are the alternatives to savings bonds as gifts?
There are many options to consider. For college, 529 plans are state sponsored college savings programs. These have seen significant growth in recent years and are specifically designed to save for college. When you know a child is going to go to college, this is an efficient tool to save for tuition and college expenses. However, there can be some drawbacks if the money is not used for college.

UGMA (Uniform Gift to Minor Account) and UTMA (Unified Transfer to Minor Account) are custodial accounts. These are flexible in the sense that the funds can be used for any purpose and similar tax treatments. However, these are considered the child’s asset, which is not seen as favorably as a parent’s asset when applying for financial aid or tuition assistance. Even individual investment accounts can be set up and earmarked for later to be passed onto the child.

How much do I need to start?
Minimums are reasonable on most accounts. As little as $25 can be set up on an automatic investment plan. Very reasonable to start out.

What are the tax implications?
Each account type has its own specific tax ramifications, beneficial or consequential, depending upon how the funds are ultimately used. For example, if a 529 plan is not used for college, there could be tax penalties or implications. When deciding which type of account to choose, it’s important to define a plan with a clear understanding of your goals and how the funds will be used.

What information should I bring to a meeting with my advisor?
You will need the child’s full name, date of birth and social security number. This information will be crucial to set up one of these types of accounts.

Whether you’ve already started investing in your children’s future and would like some reassurance on your plan or you’re just thinking about possibly getting started, our experts, like Ben, at C&N Trust and Financial Management Group are only a call or click away and always happy to talk.

Phone: 1-800-487-8784

Produced by Vogt Media
Funded by Citizens & Northern Bank

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