A custodial account can be a simple and smart gift to secure children’s future, be it your own, relative’s, or a friend. It could potentially ease off their future financial burden and even teach them basic saving and investment skills.
But why should you open a custodial account? We’re here to tell you the top benefits of having a custodial account. We even walk you through the process of how to open a custodial account on Robinhood.
- Flexibility: Custodial accounts are super flexible. They do not have any income, contribution, or withdrawal limits. There are no withdrawal penalties and no requirements for regular contributions or distributions.
- Investment: Custodial Accounts let the guardian and the child invest in a variety of assets, be it high-tech companies like Apple and Tesla or entertainment stalwarts like Disney and Facebook.
- Easy to manage finances: Custodial accounts are an effective way to save, manage, and invest funds earned by the child, such as Internship money, money from a summer job, gift money, etc.
- Tax concessions: Custodial accounts enjoy zero tax rate on the first $1050 of unearned income and a reduced tax rate on the second contribution.
- Easy to open: It is easy to open a custodial account in different financial institutions and takes minimal time and initial investment.
Robinhood does not allow an individual less than 18 years of age to open an account. Thus a parent or a guardian will have to open a custodial account on their behalf. It barely takes 10 minutes to open an account, and the entire process is conducted online. It’s that simple!
Custodial accounts are an easy and effective solution for all your child’s future financial security problems. Be it saving up for college or buying an apartment when they’re 18, the entire fund gets credited in the child’s name once they reach adulthood.