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Investing for teenager

Investing for teenager

Beautiful-Finance-32

Far more diversification for what you need for his age. QQQ is fine. But no matter what, this is good. Go with QQQM tho. Same thing, but cheaper.


Available-Iron-7419

75% voo and 25% qqq at your age you will kill it.


Cayhills

Perfect


Rob1iam

You may think this is well diversified, but is not. Buying all three major indexes separate like that creates a ton of overlap in companies. You’re going to be heavily concentrated in a handful of mega cap companies if you use this setup. All the companies in the Dow Jones are contained in the S&P 500. Most of the major NASDAQ players are also included in the S&P. Microsoft, for example, is a top holding in all 3. Mega caps aren’t bad or anything, but you’re doubling or tripling down on your exposure to a lot of them with this setup. You’re also not getting any exposure to small caps, which inevitably have periods where they outperform large caps. You might want to just consolidate all those into a total US stock market ETF like VTI or SCHB to get balanced exposure to the entire market cap spectrum, and avoid concentrations in a couple of big companies.


Investor_ed1

Thank you for the insight in overlap of large caps in all indexes..


SeanVo

VTI and/or QQQM would be excellent for long-term growth. Do everything and anything you can to make it a Roth account. As long as they can find a way to have earned income (doesn't have to be a traditional job, but it can't be an allowance from you). [https://www.nerdwallet.com/article/investing/why-your-kid-needs-a-roth-ira](https://www.nerdwallet.com/article/investing/why-your-kid-needs-a-roth-ira)


Investor_ed1

Great idea. Do I have to run a paycheck like our employer to show w-2 etc to prove that you are paying the kid?


SeanVo

I believe it ends up being as long as the child reports "earned income" on their tax return. So if a neighbor was paying them to cut the grass, and they reported it as earned income, they could then contribute up to that amount or $6000, whichever is less, to a Roth IRA. You could set the child up to receive a paycheck. Some business owners have the child do some work at their office and pay them a fair rate so they can claim earned income, file a tax return, and contribute to a Roth. The benefits of a Roth are so significant to a young person...it's great to start them as early as possible and help the child understand why contributing every year will be so helpful to their future self.


Investor_ed1

Thank you


Burple_Baze

r/bogleheads