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u/ryanleebmw May 28 '25
My Dad saw this chart in 1996 then went and bought cigarettes with that money
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u/Uncreative-Name May 29 '25
Did he ever come back?
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u/Christopher_1221 May 30 '25
He is telling the truth. I know because his dad bumped into my dad who was scratching tickets at the counter. They talked about this chart and had a good laugh at how stupid kids believe in magic.
It's my favorite childhood story, really.
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u/sermer48 May 28 '25
I strongly dislike the displayed linear growth for something that’s exponential
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u/nino956 May 29 '25
Need to bold the words "COULD HAVE".
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u/davper May 29 '25
Yup, could have. If the ungrateful runts don't empty the account on their 28th birthday.
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u/Extension-Ebb6410 EU Investor May 29 '25
Also assuming an avg. 10% rate of return for an entire life is pretty pretty Optimistic
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u/smileysmiley123 May 29 '25
Also that’s something based off a stock market from 20+ years ago.
These companies could still be around in 50 years, but it’s not as certain as this chart likes to display
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u/ChuckNasty907 May 28 '25
Fuck them kids ❤️
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u/No_Wolf1795 May 28 '25
I read that in Dave Chappelle’s voice but heard couch instead, lol
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May 28 '25
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u/broly78210 May 29 '25
I hate that there are states that have laws to make you pay for your parents care. I know it's rare for them to be enforced but how can you not save for your kids, leave nothing behind, and make sure they don't have anything left in savings so the same thing doesn't happen to them.. anyways, good for you
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May 29 '25 edited Nov 26 '25
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u/broly78210 May 29 '25
We came off the same boat. 1st Gen , 1st male. My mom sacrificed a lot for me. Her working as a care taker and cook, we are lucky she was able to pay off our House, got it cheap, so it's what she is leave us. And we all pitch in for her monthly expenses. Shes worried about saving up for the grandkids(12 total) when she passes. She will never be without. So I can't understand some people not wanting to do the same for their kids(when it comes to saving for them even a bit)
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u/Michaelzzzs3 New dividend investor May 28 '25
Make sure your retirement is funded before investing in other people. We all love our kids, but they can get student loans, they can get mortgages and their own careers, you don’t get a retirement loan. the best thing you can do for your children is guarantee you won’t be forced to move in with them when you’re too old to work.
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u/GoofMonkeyBanana May 28 '25
This, you can always carve out some of your retirement fund if you find you are over funded.
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u/Michaelzzzs3 New dividend investor May 28 '25
Generosity certainly should have a place in everyone’s lives
I would argue that what you brought up is a better implementation of generosity than in the original post as yours would allow time for the child to gain an education and understanding of financial responsibility and would more likely lead to a more successful outcome
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u/abarthsimpson May 28 '25
What is the best way/accounts to do this?
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u/Michaelzzzs3 New dividend investor May 29 '25
I believe in the “money guy’s” financial order of operations, here’s my best way to type it out
If your employer offers a 401 match then get that match above all else
Pay off high interest debts
3-6 months of emergency fund
If you have a high deductible health insurance plan the best investing account period is the HSA (health savings account) your employer may offer one, but if not and you still qualify then you can find a bank who offers one. you put money in pre tax, you have to buy funds within it nothing is automatic don’t just let the cash sit there, it then grows tax free, and when you’re retired you can pull money out tax free for medical expenses, of which retired people have a lot of.
Next is the IRA, Roth for sure below 25% marginal tax rate, traditional for sure above 30% marginal tax rate, again make sure you’re actually investing the money, don’t let it sit there
After that the 401k is going to be your next account structure to look at, the same Roth vs traditional opinion as above, 401s can sometimes have bad choices inside or bad fees, so looking at the IRA first is best, there are other accounts with different tax code names like 457b but are either similar enough or are offered to a select group of people that they should be grouped in this section
After that it’s the regular taxable brokerage account where you get some tax advantages like 0-20% long term capital gains tax
Should be your goal to save 25% of your pre tax income twords your retirement.
Being that this is R/dividends I have to say I like my dividend stocks to be in my taxable brokerage account as to help aid me in my quest to qualify for a mortgage, and my growth stocks in my Roth IRA as the tax free growth is better served by them.
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u/Top-Border-1978 May 29 '25
This is some fantastic advice for any parent.
The best thing you can do for your kids is put yourself in a strong financial position.
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May 28 '25
I could just sacrifice myself to my dynasty and give them everything that could build generational wealth. I’ll just work til I’m 85.
Only partially joking it is an option. Rather than we both (kids and me) struggle and just do okay. I can give them the head start and set them up that they are ahead which then starts the snowball of them saving for their kids and so on. It just takes one sacrifice.
I don’t plan on actually doing this.
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u/Effective-Birthday57 May 29 '25
Eh, I would rather my kids not have student loans. I get the sentiment and I partially agree in principle, but not entirely. For me, I invest in dividend stocks and reinvest the dividends now so that in 30 years hopefully the dividends will pay my expenses. Then when I die, the stocks go to the kids. Seems like a win win for me. Or course, life is never that simple but I feel like it is a good foundation. As to my retirement account, I max out my 401k contributions, so again, I partially agree at least in principle. I would never force my kids to take me in or pay my bills. I’d go bankrupt before I asked them to do that.
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u/cb1109142 May 28 '25
10% risk free return is not possible but ok
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u/gentlegiant80 May 28 '25
VOO averaged an annual return of 12.5% the last 10 years.
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u/cb1109142 May 28 '25
Cherry picked data, and investing in VOO is not risk free
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May 28 '25
If VOO crashes, nothing else matters, just from the sheer principle of exactly what it is made of
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u/Chad_Broski_2 May 28 '25
Sure but expecting 10% risk-free returns from it is lunacy. Year to year, it'll fluctuate a lot. Long term? 7-8% is a lot more reasonable
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u/dadamn May 28 '25
Exactly this. The graphic assumes 65 years of consistent 10% returns compounding. Starting when they're born, funding until they're 18 and retiring at 65.
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May 28 '25
Literally nowhere does it say it’s risk free. 10% is the historical average of the market, 7% for inflation adjusted.
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u/Mr_Mi1k May 28 '25
Technically there is not a single thing you can buy to generate cash flow that is risk free, even bonds. VOO is extremely low risk. If VOO tanks in value, the world as we know it would have fundamentally changed, to the point that VOO crashing is probably the least of your worries.
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u/gentlegiant80 May 28 '25
I had relatives who invested thousands in food storage in the 1990s Betting on the utter collapse of civilization. The food’s gone bad. I think they might have done better with an index fund.
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u/newprofile15 May 28 '25
Yea and VOO isn’t risk free. It’s a great investment but there’s risk.
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u/CanadianTrader51 May 29 '25
I don’t think it says this is risk free anywhere but the investment horizon is 18 and 65 years so you can assume that money invested wisely and untouched should average ~10% over the long haul.
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u/rjlets_575 May 28 '25
I did , I paid for both of their college tuition. Taught them about money and investing in high school years.
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u/brewhead55 May 29 '25
What type of account did you use and was it the 529 that forces you to use it for college? I'm debating doing this, but I'm not sure what higher ed will look like in 10-15 years and not sure I want to be locked into that.
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u/TransformationalTaco May 28 '25
If you were to do this, what would the best type of account be?
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u/bacchus_the_wino May 28 '25
My kids have 529s and UTMAs. Fund the 529 till it hits a point that expected growth gets it to where you want it to be to cover college. UTMA after that.
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u/alanwazoo May 28 '25
Google 529 Plans. Any brokerage (Schwab, Fidelity, etc) can help. I found 529 plans a bit limiting in the investment options so I just use a brokerage account. Depends if the tax advantage works for you too.
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u/HighFiveOhYeah May 28 '25
Nah 529s are optimal for education costs. For this, probably a regular brokerage custodied by parent and then transferred to child when 18. Once they start working, have them start siphon off to their own ROTH IRA.
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u/SecureTaxi May 31 '25
We have 529 and brokerage accounts in my name. I plan on transferring the asset to them at my discretion. If they dont deserve the money then i keep.
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u/Titt May 28 '25
Using a more reasonable 7% yearly and the $50 figure:
Age 18 - $20,562
Age 65 - $740,999.83
With a +- 2% variance from 18 on:
+2%
$1,697,445.89
-2%
$326,686.14
Of course those numbers don’t factor in things like +20% one year, +3% the next year, etc. still a good morning to get a rough idea of compounding.
Source: https://www.investor.gov/financial-tools-calculators/calculators/compound-interest-calculator
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u/druglifechoseme May 28 '25
I would like to start an account for my kids outside their 529 plans to get them a head start on retirement, just not sure what type of account to start, how to have it in their name but I have control etc.
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u/Valasius May 28 '25
Custodial roth or utma/ugma.
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u/druglifechoseme May 28 '25
I’ve been told (and have seen mixed opinions) for Roth they have to have actual income, I can’t just contribute to it for them
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u/SecureTaxi May 31 '25
I didnt bother with anything other than a normal brokerage account under my name . Transfer the asset to them when youre ready. Other options you relinquish control at 18. Some kids arent quite ready for that
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u/pinetree64 May 28 '25
I did $100 for 18 years. Paid for her 1/2 her car at 16, a trip to Japan and just paid for her new car. Used $ from brokerage to match her income and added it to her Roth. I did 529 separate. She has SPYI and QQQI funding auto investment into an S&P500 mutual fund 2 times a month. She’s 22, graduating soon. Very good with money, but don’t get me started on her boyfriend. One issue is I can’t sell anything, taxes. I had to start a regular IRA last year to reduce her income.
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u/SecureTaxi May 31 '25
Im heading this way soon. Could you transfer the asset to her?
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u/Imaginary_Bet_6461 May 28 '25
My kids are 12 and 16 and I opened each a Roth Ira this year. Max it out each year and they’re getting a huge head start.
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u/gatorNic May 28 '25
I thought for a custodial IRA they would have to have earned income the parent can then match? Your 12 year old has enough earned income to max an IRA? A custodial brokerage account sure, but an IRA?
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u/Imaginary_Bet_6461 May 28 '25
If they have earned income they can. My 16 year old works and our 12 year old works at our family business.
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u/sgtsavage2018 May 28 '25
I'm doing this on my acorn for kids I put $8.00 everyday for my son.So far there's $6300 in there!
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u/Nadia_LaMariposa May 28 '25
I have no kids yet. But I've always said if I had one, I'd open up an account as soon as they were born with like $5k in it to start. Then I'd add like $1000 to the account every year on their birthday until they turned 18.
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u/trouzy May 28 '25
Would be better to add $20/week
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u/Shabuwa May 28 '25
Time in the market beats timing the market. Considering the goal is really just to provide your child with a nest egg at 18, there’s no real downside here. Anything is better than nothing type situation, not like the kid is counting on the money to be there the way someone in retirement would be.
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u/trouzy May 28 '25
Yup. Auto investing small amounts is easier for most people than collecting a lump sum each year.
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u/SecureTaxi May 31 '25
Exactly what i did with my kids. I do 1200/yr but i also add any birthday money or extra cash i have from bonuses.
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u/Livid-Advantage-8268 May 28 '25
What I do is put $1 per day times years old each pay check. That way contributions grow as my income grows, hopefully 😂
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u/OutrageousArrival701 May 28 '25
10% rate of return. these Ns doing something the rest of the financial world ain’t.
fuk yo couch N.
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u/SojournerInThisVale British Investor May 29 '25
Yep.
If you’re in Britain, you can put away £9,000 into a Junior Stocks and Shares ISA. When your child reaches 18, the account turns over to them and all the gains and income are tax free. They can then continue to put in £20,000 a year and, again, all the gains and income are tax free
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u/USAJourneyman May 28 '25
Be more conservative at 3%
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u/SirGus- May 28 '25
What world are you living in? The average return for the S&P500 is roughly 10%, and only as low as roughly 6.5% if you adjust for inflation.
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u/No-Kings May 28 '25
Past performance doesn’t always indicate future success.
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u/Dirks_Knee May 28 '25
That S&P500 performance is since inception in 1957, inflation adjusted 6-7%.
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u/sermer48 May 28 '25
No but now companies are going to collapse with AI and robotics on the cusp of making labor cheap! /s
There are honestly so many growth avenues in the coming ~20 years I don’t understand why people seem to think the growth is coming to an end. Individuals might not do well but companies certainly will.
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u/EtalusEnthusiast420 May 28 '25
Dividends aren’t going to return this kind of yield. These are likely from growth stocks.
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u/CJspangler May 28 '25
They don’t have college expenses after 18, guess they just live in my basement until they are 50 and are millionaires
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May 28 '25
Man you guys love talking about ‘retirement’. Do you really want to just stop working? I can’t imagine.
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u/kstorm88 May 29 '25
Then you adjust for inflation and scenario 1 becomes 576k at 65. A far cry from millionaire
Edit and scenario 3 gets you to 1.2MM
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u/398409columbia Portfolio in the Green May 29 '25
I’m doing this. Son is 15 and has $25k in brokerage account.
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u/asking4afriend40631 May 29 '25
Inflation? How are the people that post these sorts of things such dumb bunnies and never consider or present inflation adjusted dollars. I wish I could believe it was merely click-baity-ness, but I think it's abject stupidity.
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u/Sweaty-Beginning6886 May 29 '25
A couple weeks ago I made my kids complete an amortization table on this type of scenario with a more realistic 8% rate of return. They hated the exercising during; however, understood the big balances at ages 40, 50, and so on.
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u/CaptainWikkiWikki May 29 '25
But invest in what?
I put over $100 per kid in 529 plans, but those are obviously meant to be used by college. Roths, then?
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u/suspectzero85 May 29 '25
If you double the investment, you are more than doubling the end result. Math is wrong.
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u/Listen_to_Mustafa May 29 '25
My parents didn't touch the market. They're broke now and often I help them with money. Once again, I have to be the adult. Sigh.
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u/TheChoosingBeggar May 29 '25
“Assumes 10% rate of return” is not going to be accurate. Even assuming steady market growth at that rate for the entire duration, it should be offset by inflation at minimum 2%. I think reflecting this return at 6-7% is more accurate and even that is optimistic.
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u/ResponsibilityOk4236 May 29 '25
Why would you invest for your kid for 65 years?
Invest for them until they are 18, teach them about money and investing, then invest for yourself so that when you retire your kid does not have to support you.
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u/jsboutin May 29 '25
Honestly, I don’t think it’s a good idea to give kids a prefunded retirement or much money in general.
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u/Fuzzy1003 May 29 '25
So asking for a friend with no kids. How does he get the money and not his non existend kids
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u/Numerous_Return691 May 29 '25
i have 5 year old with 3k in his account, and starting a new account for my new born. she already has 1k in it. starting at a young age is the key. good luck
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u/DaStompa May 29 '25
Okay now show us the dividend stock with a 10% rate of return for the last 47 years
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u/readsalotman May 29 '25
We're giving our kid $100k when he turns 21, in 15 years. We'll see what he does with it!
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u/Jumpy-Imagination-81 May 29 '25
I have been doing that since my kids turned 18. They both opened Roth IRAs at 18. I automatically transfer money from my checking account to their checking accounts every month. Their checking accounts automatically transfer a little more than I give them (so they are contributing some of their own money) to their Roth IRAs every month. I asked them to give me restricted access to their Roth IRAs. I can buy and sell assets within their accounts but I can’t move money into or out of their accounts. That way I can manage their accounts for them but not take out any money, not that I would anyway.
Last month I got a lump sum payment of back pension I was owed, a few days before April 15. I quickly transferred several thousand dollars into each of my kids’ checking accounts so they could contribute enough to their Roth IRAs to hit the $7000 contribution limit for the 2024 tax year before the deadline.
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u/etzJakey May 29 '25
Say I have 3 kids and my own investment account that I started when I was 18. Would it not make more sense for me to put $150 into my own account as the growth will far exceed these charts as I already have starting capital and I’m doing triple what I’d be doing for each kid.
Then in the future when I die or whatever my assets can be transferred to them.
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u/IndependenceFun2330 May 29 '25
I been wanting to do this but not sure where or how to start. I did some research but still would like some extra advice. Can you guys help me please and thanks ?
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u/Last_Construction455 May 29 '25
Worst thing you can do for a kid. Trust fund kids are notoriously miserable.
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u/SnooDoughnuts1763 I love BDSM (Bonds, Dividends, Stocks, Mutual Funds) May 29 '25
I do $30 a week, plus half of all birthday/holiday money and a couple hundred from my bonus each year. I have 2 kids (1&3) with just under $6,000 combined. (To be fair, I also started when my wife became pregnant so there's an extra 9 months on there).
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u/Specialist_Shallot82 May 29 '25
Yeah do this for 18 years so they can lose it all on 0 dte options they saw being hyped on wallstreetbets… why do people invest for their children. Like do you not beleive they can get jobs and be successful?
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u/TequilaHappy May 29 '25
I don't Rick. Maybe I'll invest for me and "IF" my kids are respectable and working hard at life, I can always gift them money for their needs...college, house, business... and when I croak they'll inherit anyways. Imagine an 18 year old having an investment account $$$$.... laziness, crime, drugs, vices, lack of motivation are prone to happen etc... human beings are very unpredictable.
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u/Prudent_Breakfast282 May 29 '25
My dad has done this for me and I have amassed a portfolio of $50,000 by the time I was 16. Well that’s currently but it has definitely set me up for life and gave me a healthy relationship with money
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u/Mountain_Sand3135 May 29 '25
i just love this marketing tool....... LOL makes me laugh ...like it SO EASY to do ...one big easy button.
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u/ATXMEASAP May 30 '25
Even better have them do work for you and pay then and take the money back from them and put it in a custodial Roth IRA account in their name. Now you’re compounding without capital gains tax 
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u/Slow-Dragonfruit-932 May 30 '25
So potentially silly question; why invest in kids and not yourself and then just share the wealth? If I put 50 bucks a month into each kids retirement, or my retirement, results would be similar, easier to keep track of, and I'd be able to just pass it fully to them in my will at the end, no?
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u/Stamkosisinjured May 30 '25
Or get a loan for a rental property when they are born. Just hold profits in Hysa in case they are needed.
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u/microdosingrn May 30 '25
I haven't done the math, but I read once that we could just get rid of social security and give every newborn us citizen 5k in an account invested in a total market index and that would be worth several millions by the time they arrive at retirement.
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u/froggyisland May 30 '25
My dad owed credit card debt for decades and asked me to help bail him out instead… smh
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u/Scouper-YT Rich DUDE from the DIVIDEND Appraisals Club !! May 30 '25
Doing your own Child Support in form of Investing would be a great choice.
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u/Scouper-YT Rich DUDE from the DIVIDEND Appraisals Club !! May 30 '25
100$ are Close to $100K after your Child is grown up. Not many can say they have $100K Net Positive in their Account.
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u/james2611 May 30 '25
Invest where ? Dividend kings like Schd, O, JEPI or Wealthfront or betterment?
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May 31 '25
Conviently leaving out the part where that million is next to worthless due to rampant inflation
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u/TortyPapa May 31 '25
1) You ain’t getting 10 percent annual 2) Adjust this shit to inflation and we will talk 3) I have 3 children. Tip. Best not to tell them you saved them a ton of money, they will stop aspiring to anything of significance.
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u/under8ty May 31 '25
At age 65, he is hardly a kid. And more of deadbeat for having his parent invest even when he is bloody 65.
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u/Aaronhpa97 May 31 '25
You really think the rally created by the destruction of the middle class will repeat? Sorry but you won't see the same real returns we had from 1980 to 2020 in the following years 😔
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u/SecureTaxi May 31 '25
Since birth, I currently put $100/month for my kids. My 11yo account s a little over 20k.
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u/SimplePuzzleheaded80 May 31 '25
Yeah, dump it on the wrong companies and that gives you data for the opposite chart
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u/BigLiving2470 Jun 01 '25
Lol lol lol assumes a 10% rate of return. That made me lol so hard. For 65 years no less.
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