Personal Finance

Investing kids money

  • Last Updated:
  • Dec 28th, 2022 9:46 am
[OP]
Member
Jul 9, 2008
496 posts
99 upvotes

Investing kids money

My 11 year old son won $9,000 in a football pool. I want to put it in like a growth ETF?

I assume kids cannot have an investment account in their own name? We contribute $2500 per kid per year to their RESP. What are my best options in this scenario?
25 replies
Deal Addict
Jan 11, 2020
4084 posts
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RESP that shit this year for 20% return
Failing that/rest, informal trust?

You've got time, these markets aren't going to be doing too well for the next while lol. You'll get a good price/entry point soon.
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Deal Addict
Jun 12, 2008
1524 posts
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Ripley
5 Year GIC. Your kid isn't old enough to decide what to do with the money and he will likely be mad if he finds out you took a risk and lost his money. A 5 yr GIC will mature when he is 16. The perfect age for a car or college or what ever he wants to do with it. He might appreciate you investing your money for him, but using his money is different.
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Sep 4, 2005
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mt99808 wrote: My 11 year old son won $9,000 in a football pool. I want to put it in like a growth ETF?

I assume kids cannot have an investment account in their own name? We contribute $2500 per kid per year to their RESP. What are my best options in this scenario?
Spend part of it on entry to next year's football pool!
Member
Jun 6, 2014
309 posts
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Toronto, ON
RESP 2.5k each year. Split the rest into 2.5k each and buy a GIC ladder to put it in next year.

How does a 11 year old kid enter a football pool for 9K?
Deal Fanatic
Jan 31, 2007
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Richmond Hill
mt99808 wrote: My 11 year old son won $9,000 in a football pool. I want to put it in like a growth ETF?

I assume kids cannot have an investment account in their own name? We contribute $2500 per kid per year to their RESP. What are my best options in this scenario?
My bigger question is your son enter into gambling at age 11?
Last edited by cheapshopper on Dec 21st, 2022 8:07 pm, edited 1 time in total.
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Deal Addict
Jan 2, 2015
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NOT centre of Univer…
mt99808 wrote: My 11 year old son won $9,000 in a football pool. I want to put it in like a growth ETF?

I assume kids cannot have an investment account in their own name? We contribute $2500 per kid per year to their RESP. What are my best options in this scenario?
Wow! Winning $9k is pretty awesome. Congrats to him.

Some options are (in my recommended order)
1. Put the $9k into the RESP. There is an extra $14k that does not have a match portion, you can put his money in there and it will grow tax-free and when he takes it out, the gains taxed under his tax bracket. This would be my first choice. If you want separation, you could open a second RESP for him, and just put this money in to track his performance and growth. Just make sure you don't over-contribute.
2. Open an informal trust account. All capital gains are attributed to him, dividends and interest to you. UNLESS you can prove that the $9k came from him. You can also put CTB and any other money HE earns in here for the tax advantages.
3. If there is room in your TSFA, you could open a separate account, put the money in and invest for him, when he turns 18 start transferring it over. This only works if you don't plan to max out the TSFA for yourself.

This is a great time to teach him about risk profiles and the type of investments that are suitable. I find and investors risk profile survey on line and asked my kids the questions. Then based on that, I went over some options.
On a 'smart' device that isn't always so smart. So please forgive the autocorrects and typos. If it bothers you, then don't read my posts, but don't waste my time correcting me. If you can get past the typos, then my posts generally have some value.
Deal Guru
Dec 5, 2006
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Markham
Invest in bitcoin and show him easy come easy go
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Dec 24, 2007
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ask him. explain the risk of something with a higher return, the security of a GIC. i'd maybe skip explaining inflation for now

would you rather have 10K guaranteed, or a good chance of having 11k with a risk of it being 8.

the potential investment loss is insignificant when compared to the benefit of financial literacy he can gain
Deal Addict
Jan 11, 2020
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mt99808 wrote: My 11 year old son won $9,000 in a football pool. I want to put it in like a growth ETF?

I assume kids cannot have an investment account in their own name? We contribute $2500 per kid per year to their RESP. What are my best options in this scenario?
Actually if you never used an RESP. You can always grab the previous year's CESG grants. So you can put $5000 this 2022 year, $5000 2023 next year. Then put it into XBAL. In doing so, you'll get $1000 grant from the government. Gotta be quick though, the year is ending soon and institutions are going to close for the holidays. That's what I would do. Free government money. Just make sure he goes to university lol, preferably Waterloo coop lol. I graduated without debt cuz of that thing...Coming from a poor immigrant family that didn't know English. Good times...
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Apr 5, 2017
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YOLO it all on SP500 call/put weeklies. Not financial advice.
Member
Jun 2, 2011
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Toronto
You gotta let it ride. Get him an account on Fanduel or darftking. Let him bet on more football pools. You take 20% cut as his manager.
[OP]
Member
Jul 9, 2008
496 posts
99 upvotes
Sorry forgot I started this thread. We have put 2500 in his RESP every year since he was born. My wife and I have a little room in our TFSA but likely not for long. I was going to invest it in something like a vanguard growth ETF. My question is more on tax avoidance for him.
[OP]
Member
Jul 9, 2008
496 posts
99 upvotes
cheapshopper wrote: My bigger question is your son enter into gambling at age 11?
I bet you are really fun at parties.
[OP]
Member
Jul 9, 2008
496 posts
99 upvotes
It’s a survivor pool I have been in for 15 years that has grown bigger and bigger every year. I paid his $20 entry and he made all the picks. Whether he won or lost the time we have spent together watching football on sundays cheering on his picks is worth way more than the $20.

Also he’s 11 and is a math genius. He probably understands probabilities better than. 90% of this site.

And now he has a story and memory he’ll have for the rest of his life. So all the morality preachers can find something else to comment on.
Deal Addict
Jan 11, 2020
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mt99808 wrote: It’s a survivor pool I have been in for 15 years that has grown bigger and bigger every year. I paid his $20 entry and he made all the picks. Whether he won or lost the time we have spent together watching football on sundays cheering on his picks is worth way more than the $20.

Also he’s 11 and is a math genius. He probably understands probabilities better than. 90% of this site.

And now he has a story and memory he’ll have for the rest of his life. So all the morality preachers can find something else to comment on.
Sounds like a Waterloo boy...Math is incredibly important. Saw a lot of math heavies making heavy 6-7 figures salaries (quants/FAANG programmers etc). Amazing coops at Google and Chicago Board of Exchange shit. Have him check out shit on Ed Thorpe or Bill Gross - mathematicians that made it big, well Gross (bond king) was more of a casino croupier.

Informal trust then, but you'll have to shoulder the dividend taxes, unless you use a tax-dodger like HXS/HGRO lol. Probably want to wait for this market to stop cooking first or at least rates to plateau, but market timing is a bad thing. At 18, you are obligated to pass this money to him I believe, but that's the intention. Good practice to teach him how shit like HXS/HGRO work, how they use creative accounting to avoid taxes (before they used swaps but Trudeau shut that party down.) He can even log into his brokerage account and watch the action, bid/ask etc.
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[OP]
Member
Jul 9, 2008
496 posts
99 upvotes
ADenariusSaved wrote: Sounds like a Waterloo boy...Math is incredibly important. Saw a lot of math heavies making heavy 6-7 figures salaries (quants/FAANG programmers etc). Amazing coops at Google and Chicago Board of Exchange shit. Have him check out shit on Ed Thorpe or Bill Gross - mathematicians that made it big, well Gross (bond king) was more of a casino croupier.

Informal trust then, but you'll have to shoulder the dividend taxes, unless you use a tax-dodger like HXS/HGRO lol. Probably want to wait for this market to stop cooking first or at least rates to plateau, but market timing is a bad thing. At 18, you are obligated to pass this money to him I believe, but that's the intention. Good practice to teach him how shit like HXS/HGRO work, how they use creative accounting to avoid taxes (before they used swaps but Trudeau shut that party down.) He can even log into his brokerage account and watch the action, bid/ask etc.
Thanks this is all very helpful.

He actually just completed his first math contest (CJMC) and placed honour roll for SW Ontario. I am a CPA (not tax obv) and my wife is a high school math and computer programming teacher so the genetics are there. I notice the kids who finished ahead of him go to specialized math schools where they prepare for competitions (specifically Crania in Waterloo for SW Ontario). He wrote 2 practice tests to prepare. We live in a smaller town in SW Ontario so there are limited resources available. We did have him doing kumon for enrichment but the owner / math instructor has a long term illness so we were basically paying for the books and my wife was having to teach him everything.

For all the money I spend on his travel hockey and baseball I feel like I should be pumping more resources into this special gift he has.
Deal Addict
Jan 11, 2020
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mt99808 wrote: Thanks this is all very helpful.

He actually just completed his first math contest (CJMC) and placed honour roll for SW Ontario. I am a CPA (not tax obv) and my wife is a high school math and computer programming teacher so the genetics are there. I notice the kids who finished ahead of him go to specialized math schools where they prepare for competitions (specifically Crania in Waterloo for SW Ontario). He wrote 2 practice tests to prepare. We live in a smaller town in SW Ontario so there are limited resources available. We did have him doing kumon for enrichment but the owner / math instructor has a long term illness so we were basically paying for the books and my wife was having to teach him everything.

For all the money I spend on his travel hockey and baseball I feel like I should be pumping more resources into this special gift he has.
Yeah math is the most valuable. I was good at math but stupidly went the science route because I wanted to be a doctor. But my 3.7 back in the day didn't cut it even with research publications and a good MCAT lol. Better to get things in the bag after undergrad. Back in the day, there wasn't great internet. So the line of thinking was 'Math? What are you going to do with math? Be a math teacher?' lol. My parents have no education and couldn't guide me. I got into Waterloo Chem Eng but didn't realize it's value because I didn't know what an engineer was.

Math resources if he wants to work ahead, because our public education system is shit for math, especially as they de-streamed grade 9/10 (coming up) lol. Your wife is a teacher so she'll probably know more than me.

https://cemc.uwaterloo.ca/resources/cou ... eware.html
https://www.khanacademy.org/math/k-8-grades - goes all the way into university math
https://www.math-aids.com/ - poor man's Kumon, free

Seems like the future will be robotics/AI. I wanted to get the Mindstorm EV3 for my niece, but she was too young. Plus the programming language was weird, maybe they use Python now, which is more relevant.
https://www.lego.com/en-ca/product/robot-inventor-51515

If you want a free intro to industrial programming, freecodecamp and Odin Project are a good start (Khan Academy has a training section). Good to have a head start. My friend has his own startup now, always made the big bucks programming stuff. He started programming in grade 7.
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Jul 10, 2014
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mt99808 wrote: It’s a survivor pool I have been in for 15 years that has grown bigger and bigger every year. I paid his $20 entry and he made all the picks. Whether he won or lost the time we have spent together watching football on sundays cheering on his picks is worth way more than the $20.

Also he’s 11 and is a math genius. He probably understands probabilities better than. 90% of this site.

And now he has a story and memory he’ll have for the rest of his life. So all the morality preachers can find something else to comment on.
Who did he pick to win and what did the remaining people lose with? Just curious.

If he's smart with math/numbers then explain the difference between an ETF and a GIC and ask him what he prefers. If you do it through an RESP, make sure to get the free money.
[OP]
Member
Jul 9, 2008
496 posts
99 upvotes
djdestroyer wrote: Who did he pick to win and what did the remaining people lose with? Just curious.

If he's smart with math/numbers then explain the difference between an ETF and a GIC and ask him what he prefers. If you do it through an RESP, make sure to get the free money.
There was 2 left in last week and they both had Washington so he actually split the pot. Week before bunch went out on Seattle vs Carolina and a few other single team picks. The pot was $18,600 but the guy who runs it donates $200 to the site and we gave him $200 so he netted $9,000. To be final 2 out of 930 entries is a pretty amazing accomplishment.

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