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September 2015 Moms
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Saving for Baby's future...

minniemegsminniemegs member
in September 2015 Moms
So over the last week a few things have come up. My DH and I opened a CD for our DS and my DH's dad has already contributed to it (awesome!). Then I got a random email from my DH's mom's boyfriend asking for DS's social security number. After a lot of pushing they finally told us they want to buy stock in his name for a Christmas present. Which is really thoughtful, but DH and I would rather they contribute to the CD if they want to put away for DS's future.

So here are my questions:
1. would you let them buy stock or just ask them to contribute to the account we've already put into place?
2. How/should I tell my parents about the CD so that they have the same opportunity as the other grandparents to contribute if they want to?

Any input would be appreciated, especially since DH and I are very unfamiliar with the practice of purchasing stock for someone else.
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Re: Saving for Baby's future...

  • mriandabustomriandabusto member
    I wouldn't let anyone buy stock for him. And I would just flat out say "it's a nice gesture but I'm sorry, I started a bank account of LO and I would love if you can contribute to his/her future."
    My mom literally just opened an account for LO and will add about 250 a year. I already put 575, but I still need to tell my boyfriends parents, I'm sure they'll love it.
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  • chelseajeanenechelseajeanene member
    I agree with @mriandabusto. Tell them it's very generous but you think this would benefit his future more. My grandfather passed away and his stocks were passed down to my mother, they originally were from his father and they have made little to no money at all. It can be so hit or miss but contributions staight towards his future are guaranteed
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  • dmbfan46835dmbfan46835 member
    I would let them. I think it's important to be diversified and it's also something cool that they can say they did personally for him. My aunt got me savings bonds each year growing up and I used them as a downpayment on my first home at 21. So with the stock, he could choose what he wants to do with it when he's older, liquidate, trade, add to it. Plus, interest rates right now suck, even with the recent fed increase, so while riskier, there is the possibility for more reward with stocks than the small amount a cd will pay.

    We have opened several accounts and given family the option to contribute to any if they wish. We did an investment life policy to save for college (doesnt need claimed on a FASFA as income like other college plans) It has a policy amount of $540k, the premiums are $2500 a year and by the age of 20 he will have $100k to do with whatever he wants, he's not required to just use it for college. If he forgoes school he can use it as a down payment on a house or anything else he chooses, or he can let it sit and just accumulate. Plus the policy is paid in full by then too so no more premiums and he has a policy for life.

    We also have a 529 plan, regular savings and a govt savings bond log in that people can use to easily transfer money to if they like. Or they can do something else entirely.

    So with all that said, I would let people contribute to his future in whatever ways they think will be the most meaningful. I think it is sweet that they are considering building a long term investment like that for him. Something they can contribute to each year and that he can look at when he's older and say this specifically came from my grandparents.
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  • eah325eah325 member
    edited December 2015
    dmbfan46835 said:

    I would let them. I think it's important to be diversified and it's also something cool that they can say they did personally for him. My aunt got me savings bonds each year growing up and I used them as a downpayment on my first home at 21. So with the stock, he could choose what he wants to do with it when he's older, liquidate, trade, add to it. Plus, interest rates right now suck, even with the recent fed increase, so while riskier, there is the possibility for more reward with stocks than the small amount a cd will pay.

    We have opened several accounts and given family the option to contribute to any if they wish. We did an investment life policy to save for college (doesnt need claimed on a FASFA as income like other college plans) It has a policy amount of $540k, the premiums are $2500 a year and by the age of 20 he will have $100k to do with whatever he wants, he's not required to just use it for college. If he forgoes school he can use it as a down payment on a house or anything else he chooses, or he can let it sit and just accumulate. Plus the policy is paid in full by then too so no more premiums and he has a policy for life.

    We also have a 529 plan, regular savings and a govt savings bond log in that people can use to easily transfer money to if they like. Or they can do something else entirely.

    So with all that said, I would let people contribute to his future in whatever ways they think will be the most meaningful. I think it is sweet that they are considering building a long term investment like that for him. Something they can contribute to each year and that he can look at when he's older and say this specifically came from my grandparents.

    This! I would let them buy the stock as it's wise to diversify, and the CD isn't going to yield much for a while because interest rates aren't great right now.

    We have a very diverse profile for our DD set up and gave everyone the information in case they wanted to contribute. Most people have opted for the 529 because of the great tax benefits for the donor.
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  • imsoexcited915imsoexcited915 member
    @eah325 how did you go about giving everyone the information? If you're not having a baptism or something of the like where typically family and friends contribute monetarily I'm wondering how you go about that?
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  • dmland17dmland17 member
    It is their money. They can do whatever they want with it. If their way of doing something nice for LO is buying stock, then let them. It's a gift.
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  • yellowbean15yellowbean15 member
    I get what people are saying about diversifying and that makes sense. But my husband and I aren't that knowledgeable about investing and we are not risk takers at all! We have chosen to put all of LO'S education money into an RESP (I'm not sure what a CD is as I'm in Canada but I'm guessing it's similar?). The government puts in 20% of the amount you contribute. So it's a guaranteed 20% return on your investment plus whatever interest our portion makes while it sits. That's enough for us to feel comfortable putting it all in one place.

    That said, it's pretty hard to tell someone else what to do with their money. If someone offered I would probably just accept even though I would prefer they put it into his RESP. I might say something like...."Oh that's so generous, what a special gift. We also have a CD started for LO's education....he is one lucky boy!" They might ask if you'd rather they put the money in there or choose to do that next time once they know it exists. It's really so sweet of them! He obviously has lots of people who care about him :) Good luck.
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  • eah325eah325 member
    imsoexcited915 said:

    @eah325 how did you go about giving everyone the information? If you're not having a baptism or something of the like where typically family and friends contribute monetarily I'm wondering how you go about that?

    We sent out a detailed email that basically said, we know that there are times when you'll want to give gifts to our DD and of course we are grateful for any gift you want to give her but if you're looking for ideas, we have set up the following accounts for her so as to save for her future. We gave them all of the information about how they could contribute to them if they wanted, including the name and contact information for our investment advisor etc. That approach worked because we've received several contributions into her account for Christmas this year.
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  • jen83mnjen83mn member
    We had the same issue come up with my MIL who wanted to set up a college fund for our baby. However, she didn't inform us what kind of account she was going to set up until after the fact and ended up setting up an UTMA account that has an almost 6% fee for every deposit (part of which goes to the financial advisor she went through) and no tax benefits when used for education. We wish she would have gone with a 529 plan for the tax savings and cheaper fees, but talking to her about it just made things awkward and not worth it. (We would have liked to be more involved in the type of plan considering we're paying into the account on a monthly basis as "payment" for her watching our baby 1 day a week. She also contributed a nice sum of money upfront and is going to be contributing $50/month until he graduates high school, which is very generous.)

    That being said, I would let them do what they want to do since it's their money. It's not worth getting into an argument about (which most likely would happen because people are defensive when it comes to their money choices). So I would just look at it as a gift and let them be in control ... if the stocks don't do well, that's on them. Yes, it would suck because ultimately you want the money to be put to good use and don't want to lose it, but I've learned through my experience that it's just not worth arguing about anything money-related with your relatives!

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  • amtharriamtharri member
    I would certainly let them buy stocks for your LO. Over such a long period of time the stocks will most likely perform quite well. It is also a great opportunity for your LO to learn about stocks and investing at a young age. My grandmother purchased stocks for me when I was little and that is what I asked for for Christmas some years. I was able to use this money towards a house later. A CD has such a low rate of return that it often doesn't keep up with inflation. Perhaps a mutual fund might be a great compromise. It is a large mix of stocks, bonds, real estate etc. Based on your risk level you can choose a fund more heavily weighted by stocks or bonds. A 529 plan is great to for college as there is a tax benefit for the contributor and any individual can contribute up to $14,000 a year for one child. I would definitely research them though as some states have better plans than others and you can use another states plan.
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  • LoveLee85LoveLee85 member
    I would tell them they can buy whatever but that we aren't passing out LO SS# out to ANYONE. Family or not! So, if they need a SS# for the gift, they won't get it.
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  • ForeverEverAfterForeverEverAfter member
    My Dad set up RESPs (Canadian education savings with 20% from government) for all his grandkids at birth, but still consulted with me first both times (only 1 can be opened per child, so he needed her documents and my signature). He deposited $500 when opening, and puts in some for holidays in addition to a small gift. We told everyone else it existed, so they could choose to contribute instead of gifts if they wanted. My MIL put in $500 for each at birth and my FIL regularly gives them cash at visits, and we put at least half into it.

    Ultimately I would let them know you have the CD started, but that whatever they choose is ok with you. It's very nice of them!
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  • tlc11934tlc11934 member
    I would just say "that's really thoughtful for you to contribute to LO's future. We've set up a CD to organize his funds so if you'd like to contribute to that instead I can give you the information." Kind of avoid the request. If they still push further for the stocks, let them.

    We are not responsible financially, but my mom is. I gladly gave her each kid's SS# and she's set up an account for each.
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  • dmbfan46835dmbfan46835 member
    @ForeverEverAfter I officially need to move to Canada. This sounds like an amazing program! 20% guaranteed return is incredible!! I am happy with like 8%! And the maternity leave and the free healthcare?! You guys are so blessed!!
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  • LoveLee85LoveLee85 member
    dmbfan46835 said:

    @ForeverEverAfter I officially need to move to Canada. This sounds like an amazing program! 20% guaranteed return is incredible!! I am happy with like 8%! And the maternity leave and the free healthcare?! You guys are so blessed!!

    To top their blessings off, Canada is so beyond beautiful!! Everyone is friendly(I have found)! It's like why isn't everyone rushing to live in Canada?! It's so much better than America. LOL I have vacationed in Canada a hand full of time and adored each trip.
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  • BrandiLaw87BrandiLaw87 member
    I would let them know about the CD and let them decide if they want to buy the stock or contribute to that. I personally agree with some PP's about being diversified. I have been in the finance industry for 10+ years and it really all comes down to personal preference though.

    I am also in Canada so we opened an RESP for DS (our province even gave us an extra $500 grant but they have discontinued it so LO won't get it.) We also opened youth account for him. Whenever he gets cash for birthdays, Christmas or lunar new year, it all goes into his personal youth account. I just straight up let people know that if they give monetary gifts, that's where it goes. On top of automatic contributions to the RESP, DH and I will throw money into the youth account as well. When he is older, he will have a nice little stash to use for whatever he wants (down payment or a car, etc.) We plan on doing the same thing for this LO.
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  • minniemegsminniemegs member
    Thank you for all the responses! I have had a little more time to think and I have realized my hesitation really comes down to my feelings about my MIL and not really about stocks or not for LO. I think if it didn't involve giving his SS# to them, I wouldn't care. But my MIL is pretty irresponsible and we really don't know her bf very well at all. Thankfully my DH has the same opinion of her, so since it's his mom I think I'll let him decide what he wants to do. Thank you all again and I seriously need to look into living in Canada!
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  • ebrosten33ebrosten33 member
    Do research I think u are better off getting rid of the cd and doing a 529 plan in your name not ur child put your child as the beneficiary so even when he is 18 he can't just take the money and do whatever you have control of the money or look into mutual funds where your money will get the best end result go talk to someone about the best program that will work for u and ur family but good job on trying to save for the future
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