The Intersection of FIRE and Disney

[QueenIsabella]

I don't know if they still have such a thing, but when my older two were younger, I had ~$2k for each in a "young Investors" fund. It invested in top companies that would likely to be familiar to children--Disney, McDonald's, Coca-cola, and so on. Something like that might make stock investing more tangible to your DD.

On a similar note, when each of them was ~3, we invested a small amount in a stock on eTrade. For DD(now)24, we chose Disney. When she was 5, she decided she preferred Walmart--she liked going there, they had lots of stuff she liked, and the prices were low. Not super sophisticated or anything, but the point was less about making big bucks than about her understanding her investments.

For DS(now)22, we chose Caterpillar. As a young boy, he was OBSESSED with heavy equipment! It was so funny, seeing him sitting in his car seat, appearing to study the annual report--in fact, he was admiring the glossy photos of the vehicles, hard at work. On a side note, we happened to buy his stock in early 2001. Then, 9/11 happened. Where there is great destruction, there's rebuilding. The stock did amazing for him for a good 10 years. Full disclosure--this was pure dumb luck on our part.

 

[AmyAnne]

Looking online Custodial accounts caught my eye but I see they figure into financial aid calculations in the future as an asset owned by the child.

I don't really have any advice about specific investment options; however, this sentence caught my attention. Having gone through the college application/financial aid process with four kids, my advice is to figure out how likely it is that a financial aid calculation is really going to impact any future decisions. My thought is that it really only is a factor if your child is going to go to a college that only looks at the FAFSA (that would be primarily public universities; private colleges have their own additional calculations that will "count" many more assets, so it doesn't really matter whose name they are in). Plus, I'm guessing that you--as a family that is saving a lot for college now and/or will have a decent income when your child applies to college--will not qualify for any need-based FA except for loans and work-study. For my kids, the best route turned out to be merit-based aid at private schools, which was a total surprise to me with the first kid. It turned out that he attended a school with a "sticker-price" of more than four times our in-state public universities for less than those public in-states would have cost.

 

[1st*toright]

I don't really have any advice about specific investment options; however, this sentence caught my attention. Having gone through the college application/financial aid process with four kids, my advice is to figure out how likely it is that a financial aid calculation is really going to impact any future decisions. My thought is that it really only is a factor if your child is going to go to a college that only looks at the FAFSA (that would be primarily public universities; private colleges have their own additional calculations that will "count" many more assets, so it doesn't really matter whose name they are in). Plus, I'm guessing that you--as a family that is saving a lot for college now and/or will have a decent income when your child applies to college--will not qualify for any need-based FA except for loans and work-study. For my kids, the best route turned out to be merit-based aid at private schools, which was a total surprise to me with the first kid. It turned out that he attended a school with a "sticker-price" of more than four times our in-state public universities for less than those public in-states would have cost.

This is consistent with the advice I've been getting from friends with slightly older kids. Pretty much no matter what I do or where I put assets, we are going to be ineligible for need based aid for our DD. It seems that the "merit" calcs for some of these private colleges are not quite as rigorous as I would have expected - decent grades and good SAT scores will get you some kind of a discount (I had assumed we were talking all As in AP classes, but apparently the standard is not quite that high). I guess its a good problem to have too much money/income?

 

[AmyAnne]

This is consistent with the advice I've been getting from friends with slightly older kids. Pretty much no matter what I do or where I put assets, we are going to be ineligible for need based aid for our DD. It seems that the "merit" calcs for some of these private colleges are not quite as rigorous as I would have expected - decent grades and good SAT scores will get you some kind of a discount (I had assumed we were talking all As in AP classes, but apparently the standard is not quite that high). I guess its a good problem to have too much money/income?

Based on my experience (primarily, and with the last 2 kids exclusively, applying to private LACs), you can make some general predictions from SAT/ACT scores + GPA. Generally anything above the school's median scores will put you in the range of some merit aid. The farther above the median the better. My kids got their best merit aid awards when their scores were above the school's 75th percentile. By the end, my view was that the merit aid was buying their scores for US News ranking purposes.

Also, some school's financial aid webpages will have info about specific scores required for specific merit scholarships.

 

[pillow]

This is consistent with the advice I've been getting from friends with slightly older kids. Pretty much no matter what I do or where I put assets, we are going to be ineligible for need based aid for our DD. It seems that the "merit" calcs for some of these private colleges are not quite as rigorous as I would have expected - decent grades and good SAT scores will get you some kind of a discount (I had assumed we were talking all As in AP classes, but apparently the standard is not quite that high). I guess its a good problem to have too much money/income?

My son just graduated, and my daughter is a sophomore. We did get some aid in the year both kids were in school at the same time since they take that into account. It helped that the tax return used for that year had a rental property loss on it, and therefore our income was lower than usual.

@bernina I think the thing to do is crunch numbers and guesstimate whether you'll be able to get aid. https://ifap.ed.gov/efcformulaguide/attachments/071017EFCFormulaGuide1819.pdf
I like index funds in general (for both us and the kids). As she gets older, you might consider opening a custodial Roth for her if she has earned income. Many brokerage firms won't do custodial Roths; I had to shop around and ended up at Vanguard with VOO (no minimum purchase and no fees). A custodial Roth would be sheltered from financial aid calculations, and with kids at a zero percent tax rate, its a win/win imo.

 

[1st*toright]

I like index funds in general (for both us and the kids). As she gets older, you might consider opening a custodial Roth for her if she has earned income. Many brokerage firms won't do custodial Roths; I had to shop around and ended up at Vanguard with VOO (no minimum purchase and no fees). A custodial Roth would be sheltered from financial aid calculations, and with kids at a zero percent tax rate, its a win/win imo.

Hmmm. This is what I've been looking for, I think. My older DD has a job, and I was thinking that it would make a lot of sense to start a Roth for her - some kind of vehicle where we might match her savings or something. Knowing she could withdraw the contributions if she needed to would probably make her more comfortable with the idea of socking away her hard earned money for 50 years...

 

[QueenIsabella]

My oldest got a small insurance payout due to her grandmother dying. It was ~$15k. We suggested (and she agreed) that she put $10k of it into a Roth ($5k last year, $5k this year), and then use the rest to travel. Her grandmother was a big world traveler, and DD24 inherited that gene. I figured, doing those things with the money would be an appropriate way to honor her grandmother.

I also used the argument with her that you can withdraw the principle from a Roth in 5 years. Obviously, I hope she doesn't, and takes advantage of that growth for the 50 years, but I think it does help if they know they COULD withdraw the money. When I was 24, I couldn't imagine planning a retirement. My, how time flies! But, I figure, she throws the money in there, and gets used to not touching it--even if she never invests another dime in her Roth, it'll be a good amount when she retires. She's a teacher, so she'll have a pension, plus she has a 403b (I think). So, she's really in a good position to be on autopilot for retirement.

 

[AlohaNow]

Personally I celebrate every $100k. Or when our investments made more than we did at our jobs for a quarter!

That's what I do too! If no one else is home when I'm updating in Quicken when I pass a milestone, I just do a little happy dance in my chair. If someone is home I yell out our newly reached milestone number and I'll usually get at least a 'woo hoo!' back.

And I love your idea of noting when investments make more than paychecks in a set period of time. I had never thought of it that way, and I definitely like it!

 

[1st*toright]

My oldest got a small insurance payout due to her grandmother dying. It was ~$15k. We suggested (and she agreed) that she put $10k of it into a Roth ($5k last year, $5k this year), and then use the rest to travel. Her grandmother was a big world traveler, and DD24 inherited that gene. I figured, doing those things with the money would be an appropriate way to honor her grandmother.

I also used the argument with her that you can withdraw the principle from a Roth in 5 years. Obviously, I hope she doesn't, and takes advantage of that growth for the 50 years, but I think it does help if they know they COULD withdraw the money. When I was 24, I couldn't imagine planning a retirement. My, how time flies! But, I figure, she throws the money in there, and gets used to not touching it--even if she never invests another dime in her Roth, it'll be a good amount when she retires. She's a teacher, so she'll have a pension, plus she has a 403b (I think). So, she's really in a good position to be on autopilot for retirement.

My thoughts exactly. Hopefully by the time she would be able to withdraw it, she will be able to see the benefits of leaving it where it is. But my DD is currently saving for college - wants to put herself through school without our help. Not sure that is going to be possible, but we will cross that bridge when she figures out her post-highschool plan. I have let her know that we have savings and we will talk about the financial "deal" based on her plans, but I figure that her operating on the assumption that her part-time job will contribute to her education fund isn't really a bad thing in the short term.

Maybe it isn't great, but we don't talk about money in specific terms with our kids. At various points they have been curious about our financial position like "are we rich?" kinds of questions. We live in a smaller house/drive older cars, but travel plenty, go to the theater more than their friends do, and money is never a reason not to do anything ( as in, "no, we aren't going to buy that toy because you have plenty of things to play with already" not "No, we aren't going to buy that because it is too expensive"). I don't think my teen has any sense of what our household income is - that conversation can wait until we're dealing with the FAFSA

 

[alryan]

That's what I do too! If no one else is home when I'm updating in Quicken when I pass a milestone, I just do a little happy dance in my chair. If someone is home I yell out our newly reached milestone number and I'll usually get at least a 'woo hoo!' back.

And I love your idea of noting when investments make more than paychecks in a set period of time. I had never thought of it that way, and I definitely like it!

Yes, the celebrating isn't in the traditional sense, but sounds a lot like yours. Making more than our paychecks probably won't happen again for a while but when the stock market came back after 2008 it sure was fun to see those numbers. Made me think for a minute, "if the stock market could make 20% we could retire now

 

[Mome Rath]

A lovely Cyber-Monday to all my fellow DisFIRE thread participants. So, I have to ask; what role do big holidays like Christmas play in your FI/RE strategies, or do they impact it at all? Do we have black Friday/cyber Monday deal hunters in the group, or do you refuse to play that game? Do you look for gifts or deals on regular daily use items? Do you wait all year to deal shop, or if it just happens to hit at the right time take advantage?

Further, how do you handle Christmas/holiday time? Is it a time for a lot of gift giving? How does your fam handle who you buy presents for and how much you spend? Do you think your holiday spending is impacted by FI/RE plans? Do you feel guilty for buying presents across the board? lol I just think a conversation about it all would be interesting.

To answer my own questions; it does take a chunk of change to buy presents for both sides of my little family (and it's "funny" because my husband and I don't have kids, so we have more people to buy for on each side than anyone else does) so it is something I think about, and some years frugality wins out and we don't spend much, but other years it's like; let's pile it on! lol And in those years it does make me feel somewhat guilty. Now, of course, we don't do debt and try not to be frivolous and it won't really impact the end result of our FI/RE plans... but it's something I reflect on every November/December.

I'm a black Friday/cyber Monday stalker, so I do wind up buying the bulk of my presents during sales, so that does help, but it does then stack up the spending during the end of the year. And, as a mild minimalist I try to figure out things people will actually use, so that plays a role on what we buy who. I enjoy giving gifts as long as it is something that the person wants and will actually use.

 

[robinb]

Hmmm. This is what I've been looking for, I think. My older DD has a job, and I was thinking that it would make a lot of sense to start a Roth for her - some kind of vehicle where we might match her savings or something. Knowing she could withdraw the contributions if she needed to would probably make her more comfortable with the idea of socking away her hard earned money for 50 years...

My DD20 has a Roth that we have been contributing into for her for the last two years.

 

[ski_mom]

Is Vanguard one of the best places for a young person to open a Roth IRA? My DD22 is wanting to start contributing to one as well.

 

[AmyAnne]

Is Vanguard one of the best places for a young person to open a Roth IRA? My DD22 is wanting to start contributing to one as well.

My kids have their Roths at Vanguard. Super easy to sign up for and good (low fee) investment options.

 

[bernina]

Is Vanguard one of the best places for a young person to open a Roth IRA? My DD22 is wanting to start contributing to one as well.

I'm about 20 years past your DD but highly recommend Vanguard for most anyone looking to open an investment account. We have a brokerage account and Roth and traditional IRA accounts (for backdoor Roth IRA) through vanguard and are very happy with them. Low fees, website is pretty easy to use, and access to great funds (VTSAX I'm looking at you!!).

 

[WVMomof3]

A lovely Cyber-Monday to all my fellow DisFIRE thread participants. So, I have to ask; what role do big holidays like Christmas play in your FI/RE strategies, or do they impact it at all? Do we have black Friday/cyber Monday deal hunters in the group, or do you refuse to play that game? Do you look for gifts or deals on regular daily use items? Do you wait all year to deal shop, or if it just happens to hit at the right time take advantage?

Further, how do you handle Christmas/holiday time? Is it a time for a lot of gift giving? How does your fam handle who you buy presents for and how much you spend? Do you think your holiday spending is impacted by FI/RE plans? Do you feel guilty for buying presents across the board? lol I just think a conversation about it all would be interesting.

To answer my own questions; it does take a chunk of change to buy presents for both sides of my little family (and it's "funny" because my husband and I don't have kids, so we have more people to buy for on each side than anyone else does) so it is something I think about, and some years frugality wins out and we don't spend much, but other years it's like; let's pile it on! lol And in those years it does make me feel somewhat guilty. Now, of course, we don't do debt and try not to be frivolous and it won't really impact the end result of our FI/RE plans... but it's something I reflect on every November/December.

I'm a black Friday/cyber Monday stalker, so I do wind up buying the bulk of my presents during sales, so that does help, but it does then stack up the spending during the end of the year. And, as a mild minimalist I try to figure out things people will actually use, so that plays a role on what we buy who. I enjoy giving gifts as long as it is something that the person wants and will actually use.

Gift buying is not my favorite thing. I try to keep things very low key, even when the kids were younger. I only buy for my parents and DH's parents and our 3 kids. Sometimes DH will get something, but not always. It gives me high anxiety every time I read about people who like to shop and have long lists of people. lol I think it helps that we do not live near family. Maybe if we saw them at Christmas I would feel more compelled to buy for more people. Kids get 3 gifts plus stocking stuffers. This year we are doing a trip right after Christmas so I am trying to keep their 3 things at lower price points. It is hard because all they want is pricier things. I have picked up a few things but nothing so far today or on black friday. I did just have to buy tires for the car that they share. I asked DH if I could wrap a tire for each of them and put under tree. lol

 

[Mome Rath]

The tire thing would totally be something my family would do... another favorite is to go take something from someone's house, see if they even notice, and then wrap it up for them and put it under the tree. lol (As a joke of course.)

Yes, it's harder when you see the fam on actual Christmas, and I do enjoy giving gifts but I'm definitely not a shopper, so I order online mostly. We don't all agree on price limits and things like that, so it's kind of always up to what you're in the mood to spend, which changes year to year... and kids get harder and harder to impress.

 

[georgina]

Is Vanguard one of the best places for a young person to open a Roth IRA? My DD22 is wanting to start contributing to one as well.

The most important thing is to start a Roth somewhere! My oldest 2 (ages 29 and 27 now) have Roth's at T Rowe Price in the Capital Appreciation Fund. It was closed to new investors by the time my youngest (24) had earned income, so she is in Vanguard. However her employer had a whole seminar about contributing after-tax income to the company savings plan and rolling it into a Roth, so she has that at Fidelity now because that is where the 401k is. It is more important to just start somewhere.

 

[QueenIsabella]

Honestly, I don't even know what DD24 has her Roth in. She started it last year, so we're not on any paperwork. We have her work with our financial advisor--her fees are very low because she's linked to our account, and she's not all that interested in investing. We've worked with the same person for ~25 years now, and have been pleased with our investment growth, so we figure she'll be okay, even if she's not actively involved.

 

[1st*toright]

A lovely Cyber-Monday to all my fellow DisFIRE thread participants. So, I have to ask; what role do big holidays like Christmas play in your FI/RE strategies, or do they impact it at all? Do we have black Friday/cyber Monday deal hunters in the group, or do you refuse to play that game? Do you look for gifts or deals on regular daily use items? Do you wait all year to deal shop, or if it just happens to hit at the right time take advantage?

Further, how do you handle Christmas/holiday time? Is it a time for a lot of gift giving? How does your fam handle who you buy presents for and how much you spend? Do you think your holiday spending is impacted by FI/RE plans? Do you feel guilty for buying presents across the board? lol I just think a conversation about it all would be interesting.

To answer my own questions; it does take a chunk of change to buy presents for both sides of my little family (and it's "funny" because my husband and I don't have kids, so we have more people to buy for on each side than anyone else does) so it is something I think about, and some years frugality wins out and we don't spend much, but other years it's like; let's pile it on! lol And in those years it does make me feel somewhat guilty. Now, of course, we don't do debt and try not to be frivolous and it won't really impact the end result of our FI/RE plans... but it's something I reflect on every November/December.

I'm a black Friday/cyber Monday stalker, so I do wind up buying the bulk of my presents during sales, so that does help, but it does then stack up the spending during the end of the year. And, as a mild minimalist I try to figure out things people will actually use, so that plays a role on what we buy who. I enjoy giving gifts as long as it is something that the person wants and will actually use.

Good topic! I struggle with this time of year - both of my kids birthdays are right around Christmas, so its really the only time of year we do gifts. We do not shop much in other times of the year (although I will keep my eye open for deals on future Christmas gifts). I am making an effort to be more deliberate about Christmas giving - we've never gone into debt because of it, but before I was focused on FIRE it definitely used to be a little out of control. I do budget for Christmas, and even if we go over budget a bit, it isn't enough to impact our overall savings goals. The issue is that while my teen doesn't have a lot of wants/needs, the things she does need are pricey - her phone is 3 years old and about to die, so its time to replace it, and that alone is more than twice what I'm spending on her little sister's gifts in total. I try to make most gifts useful/long lived, and minimize the additional stuff that get added to my household.

My list of people to buy for is mercifully short - just my immediate family and a couple of teacher gifts. My family stopped doing extended family Christmas gifts a while ago - none of our kids need more stuff, and it just wasn't meaningful (we are really spread out, and don't do the holiday together). My parents also asked that we stop exchanging gifts a while ago. My mom still gets to give the kids birthday presents (usually clothes), and my dad works with each grandkid to do a charitable donation in their name (giving is very important to him, and he wants to educate them about how to choose a charity that will both address an issue that the kid cares about and use the donation effectively). On the other side, the grandparents live out of the country, so they send small token gifts to our kids, and my husband sends them a small gift, so that isn't much of a burden either.