![]() ![]() ![]() Cash and investment assets in the account become the child’s property when they reach a designated age, usually 18 to 25, depending on the state the account is held in. Custodial accounts, also known as UTMA/UGMA accounts, let you invest on behalf of a child. You may be able to deduct contributions from your taxes, the investments grow tax free while they’re in the account, and you might not have to pay taxes on withdrawals used for eligible education expenses. Check out 529 plans for investing to pay for educational expenses. Withdrawals before retirement could incur penalties and taxes. These accounts are best for long-term investing. Retirement accounts like an IRA or a 401(k) provide tax benefits to help you save for retirement. ![]() They’re also a good choice when you’ve already maxed out your retirement contributions for the year. Taxable accounts are best for financial goals other than retirement, like a home down payment. Taxable brokerage accounts are a great way to build wealth, but as the name suggests you may owe taxes on any income, like dividends or profitable asset sales. Different kinds of investment accounts are best suited for different types of goals: You’ll need an investment account to buy index funds. Here’s how you can easily and cheaply buy index funds to reach your investing goals. Index funds, which buy a basket of assets to track the performance of indexes like the S&P 500, are investment portfolio staples due to their low-cost, diverse nature. ![]()
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