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Post by Luckychoices on Jul 26, 2015 12:02:42 GMT -8
If you've ever considered opening an AAPL account for your children or grandchildren, you may be interested in what we decided to do for ours. My wife and I have six grandchildren from my two sons (46 & 43) and four of the younger children are still living with their parents. Two granddaughters (15 & 12) are in London with my older son and his wife and two grandsons (13 & 9) are living locally in the SF Bay Area with their parents. My wife and I have wanted a way to share with them some of the benefits we've received from owning AAPL long term and hopefully encourage them to develop good habits regarding saving and investing their money. So we opened a Schwab One Custodial Account for each of them and started them off with 10 shares of Apple stock. We told them that we would match any money they contributed to their account, up to $1000/year. We also plan to add a small number of AAPL shares to each of their accounts each year, but in our letter to them we only mentioned money, not stock. So far, only one of the grandchildren has contributed his own money to his account but we have high hopes the others will do so as well. Our 12 year-old grandson was very excited about his account and eventually decided to move enough money from his savings account to pick up 5 extra shares of stock. A day or two after I bought the 5 shares in his account, he was still filled with enthusiasm for the idea, and decided he wanted to go bigger and buy an additional 10 shares, even though this required him to give up a total of $956.65 from his savings account. Before the transactions settled, we took him with us to the local Charles Schwab office so he could meet “his" financial consultant and make the check deposit himself. He was pumped. The fact that AAPL has been going sideways for so long may turn out best for them in the long run, even though it’s painful for those of us on the board, because as I send them periodic charts of their stock's value, they will clearly see that there’s no sure thing, even with such a great stock as AAPL and, in my opinion, will appreciate the upward movement of their stock value even more after enduring the AAPL doldrums of the last few months. Cheers to the AAPL Longs and to any future AAPL Longs!! This is the letter we sent our young grandkids ================================= Hello Emeline, Eliana, Christopher and Zachary, We have created a Schwab One Custodial Account for each of you with Charles Schwab. Each of your accounts holds 10 shares of stock for Apple Inc. Your accounts will not be accessible to you until you turn 21 years of age and we expect that it will appreciate significantly in value prior to that time. We also plan to add money to each of your accounts, as we’re able, every year. Additionally, in future months and years, if you wish to contribute to your own account, with money you’ve saved or earned, we will match your contribution up to $1000/year. For example, if you want to put $100 into the account we will also contribute $100 so your increased investment will be doubled. You, of course, could contribute more than $1000/year to your accounts, but any amount over $1000 would not be matched by us. The account will continue to be invested only in Apple stock unless or until we decide to invest it elsewhere. At this time your Apple stock is earning quarterly dividends of $.52/share or $2.08/share each year and it’s anticipated that the dividend paid will increase by about 10% each year. The dividends are paid in February, May, August and November and the dividend money will be invested in more shares of Apple Inc. As you can see from the table and chart below, the price of a share of Apple stock varies from day to day__sometimes by a great deal. That means the value of your account will vary as well. To check on the current price of Apple stock, you can check this site: finance.yahoo.com/q/h?s=AAPL+HeadlinesThe stock identification for Apple Inc. is AAPL. Once you determine the price of the stock at any particular time, multiplying that price times the number of shares in your account (at this time, that number is 10) will give you the value of your account at that time. As you will soon notice, your account will vary widely in value as AAPL rises and falls due to the whims of buyers and sellers of the stock. Not to worry. You’re owners of the stock for the long term and short term fluctuations won’t affect the eventual value of your account. We hope your account will encourage you to understand the importance of saving and the value of thoughtful investment. If have any questions about your Custodial Accounts, now or in the future, just let us know. Much Love, Grandma and Grandpa ######## ================================= This is the spreadsheet and chart which represent Christopher's account
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Post by rickag on Jul 26, 2015 13:59:43 GMT -8
Will you adopt me? Kidding aside, are they in Roth IRAs?
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Post by mace on Jul 26, 2015 19:04:09 GMT -8
Do you know that the maximum tax exempt annual gift is $14,000? In other words, you can give $14,000 to each of your children and grandchildren each year. Together with your wife's gift, each child and grandchild could get a maximum of $28,000 tax exempt gifts.
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Post by artman1033 on Jul 27, 2015 6:13:17 GMT -8
Do you know that the maximum tax exempt annual gift is $14,000? In other words, you can give $14,000 to each of your children and grandchildren each year. Together with your wife's gift, each child and grandchild could get a maximum of $28,000 tax exempt gifts. PLEASE consult an tax attorney. MACE is correct. + you may be able to transfer to your Grandchildren in a way that does not COST a lot in taxes. GOOGLE Buffett & Gates.
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Post by Luckychoices on Jul 27, 2015 9:32:58 GMT -8
Will you adopt me? Kidding aside, are they in Roth IRAs? Not IRAs of any kind, rickag, because we want them to be able to access the money when they turn 21. If they then decide to put some or all into an IRA, it will be their choice to make. But our intention is to encourage them to make smart decisions about money and at least part of that, in my opinion, is being able to not spend money just because it's available to be spent.
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Post by Luckychoices on Jul 27, 2015 10:23:01 GMT -8
Do you know that the maximum tax exempt annual gift is $14,000? In other words, you can give $14,000 to each of your children and grandchildren each year. Together with your wife's gift, each child and grandchild could get a maximum of $28,000 tax exempt gifts. I did know that, mace, but we wouldn’t give that much money to a grandchild even if we had the cash available to do so. The purpose of the custodial accounts was to encourage them to develop a good money sense, to teach them to be financially responsible for the rest of their lives, not to GIVE them money which is obviously a much different thing. We want them to be self-sufficient and independent and to understand that it’s their responsibility, not their parents or grandparents, to make their way in the world. We'll help them when appropriate (e.g. college) but they won’t expect a new car in the driveway when they graduate from high school. As an aside, my younger son, who lives locally, occasionally mentions to me that the inheritance for my two sons must surely be split 80%-20% in his favor since his older brother has lived in London for the past three years, thereby depriving us from seeing our granddaughters on an ongoing basis. I'm reasonably certain he's kidding.
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Post by Luckychoices on Jul 27, 2015 10:36:35 GMT -8
Do you know that the maximum tax exempt annual gift is $14,000? In other words, you can give $14,000 to each of your children and grandchildren each year. Together with your wife's gift, each child and grandchild could get a maximum of $28,000 tax exempt gifts. PLEASE consult an tax attorney. MACE is correct. + you may be able to transfer to your Grandchildren in a way that does not COST a lot in taxes. GOOGLE Buffett & Gates. Thanks for the suggestion, artman, but as you see from my response to mace, I knew about the $14,000 tax exempt annual gift but don't plan on such large contributions to our grandchildren. Plus, the money going into the grandchildren's accounts is already written off on our taxes. I also have read about how Buffett and Gates are handling the distribution of their wealth and, if our personal wealth ever approaches their level, I'll have a tax attorney on speed-dial. So far, it appears that AAPL would have to go to $5,618/share for us to make our first billion, so I don't foresee a tax attorney in our future.
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Post by mace on Jul 27, 2015 12:34:47 GMT -8
I would at least give each your wife's $14000. Saving $14,000 is really hard. I manage to do that only after 30 years old.
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Post by Luckychoices on Jul 27, 2015 14:07:12 GMT -8
I would at least give each your wife's $14000. Saving $14,000 is really hard. I manage to do that only after 30 years old. You're right, mace. Saving $14,000 is really hard and having someone give you $14,000 is really easy. Can you imagine our youngest grandson, as a 9-year-old, getting $14,000 put into his account? Is he going to appreciate it's value after it came so easily? I don't think so. I always liked this old quote: Give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime. __Maimonides This is what I want us to do for our grandkids__only with money instead of fish.
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Post by Luckychoices on Sept 6, 2015 13:27:59 GMT -8
At the end of July when I posted about our grandson Christopher’s decision to invest some of his own money (matched by us) into his custodial account, he was excited and we were excited for him. The satisfaction he got from adding an additional 15 shares to the 10 he got from us was apparent. Since then, of course, he’s been harshly introduced to the risks as well as the rewards of investing. Big time. And, of course, while he was giving me verbal grief about his investment going south, I was thinking that now might be a good time for him to use additional savings to buy more AAPL at the lower price. Fortunately, his father felt the same and encouraged him to do just that. Now he’s all in after investing the rest of his savings. He paid half of an additional 20 shares and, from out of nowhere, his 9-year-old brother now decided to jump in with all of his savings and bought 26 shares. Last week, we decided to take advantage of the lower stock price and added an additional 5 shares for each of the grandkid’s accounts. Christopher now has 50 shares, his brother, Zach, has 41 shares and their new yearly AAPL dividend totals will be $104 for Christopher and $85 for Zach. Now, hopefully, AAPL will finish 2015 the way we all want it to and they’ll be able to experience the upside of investing instead of just the downside. Cheers to the AAPL Longs!!
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Post by Luckychoices on Jul 6, 2019 11:26:29 GMT -8
So almost four years ago, my wife and I decided to set up custodial accounts for our 4 youngest grandchildren (all <15 years-old at the time), two grandsons who live locally and two granddaughters who live in London. Our intention was primarily to encourage them to learn the importance of saving and investing their money but also to gift them money that they couldn’t access until they were 21 and, hopefully, had developed those good traits. Three members of AFB were nice enough to offer suggestions as to the best way to go about that and many other members viewed the discussion. Since I’ve not posted to this thread since 09/06/15, I decided it was time for an update. As I mentioned in my last post in 2015, after we opened each the four custodial accounts with 10 shares of AAPL in December of 2014, Christopher was the first of the grandchildren to kick in his own money, followed by his brother later in the year. You could check out that 09/06/15 post to bring yourself up-to-date. In April, 2016, Emeline bought 2 shares, followed by a purchase of 6 shares in 2017 and 6 more in 2018. Remember that we doubled the number of shares they purchased with their own money. After the initial purchase to open the accounts, my wife and I bought 5 shares for each account in 2015, 10 shares in January of 2016 and then 10 shares each quarter from 08/12/16 to 12/04/18 for a total of 130 shares for each grandchild. Plus, of course, the shares we bought to match their purchases. For the first time since 2015, this year we bought each grandchild only 5 shares instead of 10 when we added to their accounts. As shown in the table, for the first four years of their accounts, each grandchild used their own money to buy shares except 16-year-old Eliana, Emeline’s younger sister, but she finally did so on the last day of 2018. Emeline is now away at University in Wales and, yes, that makes me feel old(er). I really enjoyed the way Eliana ended up jumping into purchasing AAPL with her own money so I decided to post the series of email messages between us, starting with the message I got on the last day of 2018: ========================== December 31, 2018 at 8:48 AM Hey Grandpa,
I would like to say thank you for the $200 I received from you and grandma. I’ve decided to invest it in apple stock as well as put some of my money in to it as well, I’d like to buy 4 shares please. Depending on what time you get this the price will have changed so if you just let me know the price I’ll get my parents to send it over from me.
Hope you had an amazing Christmas and are both doing well, heard you have some cool trips planned, where are you off to?
Love you lots, Eliana ========================== December 31, 2018 at 1:45 PM Hi Eliana! You’re very welcome for the $200. Your grandmother and I are both happy you decided to invest it and some of your personal money into AAPL stock. A large part of the reason we opened Custodial Accounts for you guys in the first place was to encourage you all to develop a good habit of saving and investing as you get older. You’ve picked up a total of 8 shares @ $157.10/share today and your half is $630.96 which we’ll round up to $631. :-)
We had a very nice Christmas and hope you guys did as well. As far as trips go, in 2019 we’re going to Yellowstone, India, Brazil and Madagascar with a week in South Africa after the trip to Madagascar.
So happy you decided to invest and I’m sure you’ll be glad that you did. As you can see from your chart, your investment has already doubled. :-)
Much love from Grandpa and Grandma!!
========================== May 25, 2019 at 6:38 AM Hi Grandpa,
I just checked apple stock and its ~180. Do you think now is an okay time to purchase stock so it begins to ‘appreciate’ (if that’s the right word)?
How are things across the pond for Grandma and yourself?
Love you lots, Eliana
Sent from my iPhone ========================== May 25, 2019 at 2:08 PM Hi Eliana! So great to hear from you! Your grandmother and I are both doing fine.
Apple share price has dropped over the last month because of Trump’s ridiculous trade tariff war with China. Many short-term AAPL “investors” panicked and sold for fear of the price dropping even farther. And, to be honest, it may.
But here’s the deal, the share price seems to be stopping (not decreasing further) at around $178-$179, which indicates there’s some support there. One of two things will probably happen: 1. Trump’s trade war with China will *end*, and the share price will increase very quickly as investors start buying back into AAPL. 2. Trump’s trade war will get *worse* and the share price will drop even further. Don’t forget, AAPL was down to $142 on 01/03/19.
Looking at each of the two possibilities, if you buy now and #1 happens, you’ll be happy as a clam because the share price will be climbing from the price you paid.
If #2 happens, and you purchased at ~$180, you may be unhappy to see your recently-purchased stock lose value. Don’t forget, some time back, I told your cousin, Christopher that it was a reasonably good time to buy AAPL at ~$125 and, after he had purchased the shares, the stock price dropped $35 to $90/share. He gave me a lot of grief and a fair amount of stink-eye because of that. My response to him was to remember he's a *long-term investor*, not a short-term investor, so he shouldn't worry about it. Now that the share price has climbed $90 from that $90/share price, he’s fine but it’s something you should keep in mind. However, you won’t have access to your account for another 5 years so what happens short-term in those 5 years isn’t all that important, IMO.
BTW, your 133 Apple shares produced a dividend on 02/14/19 of $97.12 and another on 05/16/19 of $102.44 for a total of $199.56. With the recent share price drop you picked up an additional share of stock at $186.64, so that was the first share of AAPL purchased *entirely* from your AAPL dividends. That should feel good because your AAPL shares are adding $ to your account 4 times a year. As you can see from this page, AAPL will be paying $.77/share each quarter or $3.08/share each year: investor.apple.com/dividend-history/default.aspx We also purchased 5 more shares for each of you at that same price. Another thing to keep in mind is that since we match the shares you purchase, you immediately double your investment, which means the share price would have to drop to less than half of your purchase price for you to *temporarily* lose any of the money you invested.
So after all this, what’s my suggestion? Keeping in mind what could happen, I’d buy the stock now, my reasoning being that even if the share price drops from my purchase date, I know it will come back eventually and exceed my purchase price. However, if I didn't buy now and the purchase price started to climb, I’d feel more like I blew it and won’t get a chance to buy at a level that was readily available to me. Perhaps that isn’t the greatest explanation but it’s the best I can do. Sorry. :-)
In any case, please let us know what you’d like to do and we’ll get it done for you. And, BTW, appreciate *is* the right word.
Much love, Grandpa and Grandma
========================== May 27, 2019 at 3:21 PM Hey Grandpa,
Looking over all the information I’d like to purchase just one share. My minimum wage weekend job isn’t allowing more for the time being😂.
I’m not too sure with how the money transfer process works but I’m assuming if I give my parents the money they can transfer it over to you? So just let me know the price for when you buy it and I’ll make sure to pester them.
Last I checked it was $178 which is ~£140 .
Seeing the spreadsheet is amazing. It’s great to see money working for me, very satisfying!
Love you lots, Eliana
Sent from my iPhone ========================== =>Continued on next post<=
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Post by Luckychoices on Jul 6, 2019 11:31:02 GMT -8
=>Continued from previous post<=========================== May 31, 2019 at 8:41 PM Hi Eliana! I ended up buying your stock at @178.30 so now you have a grand total of 141 shares. You’ve put in your own money to buy 5 additional shares ever the last 6 months (since 12/31/18) plus you picked up an extra share with your dividends from the last two quarters. Congratulations! When you can access your account in 5 years, you’ll be very happy you invested for the long term.
Now you can pester your folks to send your $178.00 to cover that new share you just bought. :-)
I’m including an updated spreadsheet that brings you up to date. Glad you find it helpful.
Much Love, Grandpa and Grandma
========================== June 8, 2019 at 4:36 PM Hi Eliana! I have good news and I have bad news. The good news is that now you have your very own copy of your Custodial Account spreadsheet using the Numbers application on your Mac, iPad or iPhone. The bad news is that the copy I sent you was incorrect on the "Eliana’s Investment Current Worth =>” section. The value formula should have been divided by two because that will give you the increased value for just the $ that you contributed and not include the portion contributed by your grandmother and myself. That gives a much reduced % for "Eliana’s Investment % Increase =>”. Sorry about that mistake.
Love, Grandma and Grandpa
Note: Forgot to mention, just change the date and the share price and the spreadsheet will update ========================== June 10, 2019 at 1:30 AM Hey Grandpa,
Just looked at the spreadsheet and I’m loving the numbers, they all seem to be showing what you’ve told me about the money making money.
I must say I’m impressed with your spreadsheet abilities- very impressive!
Love you lots and lots. Heard you will be taking a trip to Brazil, sounds fun. Which part are you going to?
Big hugs, Eliana Aka the best granddaughter ever
Sent from my iPhone ========================== Hi Eliana! Sorry it took me so long to respond. Loved your email!!
Glad you’re appreciating the part about “…the money making money”. It’s a nice “feature". :-)
And thanks for the nice complements regarding my “…spreadsheet abilities”. I must admit to enjoying their functionality when it comes to formatting and displaying information for maximum understanding.
As far as our trip to Brazil, we’re headed to the Pantanal area since it’s one of the premier locations in South America to see and photograph wildlife, which, as you know, is something your grandmother and I very much enjoy. This link will give you a good overview of our destination: en.wikipedia.org/wiki/Pantanal
I hope you’ve been following the AAPL share price recently because it’s had a nice bump since your recent purchase.
We’re looking forward to seeing you all when we return.
Love from Grandma and Grandpa ==========================
So that’s my update on the custodial accounts. I had to break it up into two posts in order to include all 5 attachments. We're pleased to have the grandkids contributing to the accounts as they’re able to do so but only our granddaughters have worked outside the home and then only at minimum wage. Consequently, the money each of the four have available is mostly birthday or Christmas money, etc. Obviously, their continuing education is most important but if any of the four do get part-time or summer jobs, I’m hoping they’ll be inclined to save some of their earnings in their custodial accounts…as AAPL shares, of course. Cheers to the AAPL Longs!!
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Post by gtrplyr on Jul 6, 2019 21:32:16 GMT -8
Well done. I hope to model something very similar for my kids soon.
Actually their uncle (my bro) happens to be a pretty high powered attorney and is extremely generous with them. Last Christmas they each received a pretty tidy sum and I opened custodial accounts for each of them. I picked an investment for about 90% of the money but let them spend the additional 10% on their choice ... one got some SBUX and the other got DSNY.
I think I will tell them I will match any money they put into the account dollar for dollar going forward.
Thanks for the great idea !
Cheers to the longs
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4aapl
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Post by 4aapl on Jul 7, 2019 20:09:34 GMT -8
Thank you for sharing, Lucky
I've been considering a similar possibility, with my kids. While a custodial account is a possibility, a small business tax book has made me really consider Roth IRAs for them. That would limit contributions to what they earn, but we could match it and contribute for them, so that their hard earned money is not completely used up. We may have to do both types of accounts, but I feel the advantages of the Roth are huge, and they can withdraw contributed funds earlier than a traditional retirement age and without a SEPP. I believe the contributions need to stay in at least 5 years, though that's a rough timeframe due to the variables in counting those years per the tax code.
My son, who is 12, has found some work here and there, both from raking/bagging pine needles, and from things like helping out when I was helping a friend with a water heater install at their restaurant, and since I didn't want money they gave it to him. Right place, right time. He's also been running the snowblowers sometimes, first the electric and now the big gas one. And he just started mowing the lawn.
Alas, his funds are earmarked for an expensive RC car that he wants. But he is showing his work ethic to us and others, and each person has to learn the value of money for themselves.
Personally, I don't think I will push AAPL on my kids as much, even if it is what makes the funds available. I think I would like them to pick for themselves.
I'm guessing that if going through Schwab you still have a decently sized trading cost, and that you just take care of that on the side. What are your thoughts on that, and did you consider any of the even lower cost options that are out there?
Thanks
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Post by Luckychoices on Jul 8, 2019 8:20:07 GMT -8
Well done. I hope to model something very similar for my kids soon. Thanks, gtrplyr! Glad you found it helpful. Actually their uncle (my bro) happens to be a pretty high powered attorney and is extremely generous with them. Last Christmas they each received a pretty tidy sum and I opened custodial accounts for each of them. I picked an investment for about 90% of the money but let them spend the additional 10% on their choice ... one got some SBUX and the other got DSNY. I'm sure they'll be very happy with SBUX and DSNY. A "pretty tidy sum" sounds like a *great* Christmas gift. I was *thrilled* to get a bike at Christmas when I was 12 but a "pretty tidy sum" would have been even better. I think I will tell them I will match any money they put into the account dollar for dollar going forward. Thanks for the great idea ! Cheers to the longs I've mentioned to our grandkids more than once that being able to double one's investment immediately won't happen in real life so take advantage.
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Post by Luckychoices on Jul 8, 2019 21:26:22 GMT -8
Thank you for sharing, Lucky You’re very welcome! I've been considering a similar possibility, with my kids. While a custodial account is a possibility, a small business tax book has made me really consider Roth IRAs for them. That would limit contributions to what they earn, but we could match it and contribute for them, so that their hard earned money is not completely used up. We may have to do both types of accounts, but I feel the advantages of the Roth are huge, and they can withdraw contributed funds earlier than a traditional retirement age and without a SEPP. I believe the contributions need to stay in at least 5 years, though that's a rough timeframe due to the variables in counting those years per the tax code. We actually weren’t smart enough to think through what type of account might make more sense than just a custodial account. We were more concerned that the grandkids develop an appreciation for frugality and savings, but you may be right...Roth IRAs may be the best way to go. My son, who is 12, has found some work here and there, both from raking/bagging pine needles, and from things like helping out when I was helping a friend with a water heater install at their restaurant, and since I didn't want money they gave it to him. Right place, right time. He's also been running the snowblowers sometimes, first the electric and now the big gas one. And he just started mowing the lawn. Wow! Congratulations on having a responsible, hardworking 12 year old. Not nearly enough of them around, IMHO. I remember when I was that age complaining to my father that I thought my $.25/week allowance for mowing the lawns was just not enough. His response was that I got to live there, rent free and didn’t have to pay for my meals. I *thought* he was just tweaking me, but he may have just been making a point. Alas, his funds are earmarked for an expensive RC car that he wants. But he is showing his work ethic to us and others, and each person has to learn the value of money for themselves.So well put. My wife and I are both hoping that when each of our grandchildren turns 21 and gets access to their money, they will have developed the traits we’re trying to encourage about saving and investments. Right now though, it's impressive to me that your young son is willing to work hard for what he wants instead of just expecting his parents to indulge him. Personally, I don't think I will push AAPL on my kids as much, even if it is what makes the funds available. I think I would like them to pick for themselves. The reason we’re not giving the grandchildren the opportunity to pick their own stocks is because we want to insure, as much as possible, that this whole thing is a positive experience. Knowing that they may pick a *better* stock, or stocks, than AAPL isn’t enough for me to not worry that they’d pick poorly and have a negative experience. Our point was never about making sure they learned about *what* investments to make, it was to encourage them to save and invest their money. Learning about good investments, other than AAPL, will be something they’ll have to learn themselves when they control the account. Meanwhile, they’ll benefit from receiving the quarterly AAPL dividends and see that a good stock can overcome short term volatility and provide great returns over the long term. I'm guessing that if going through Schwab you still have a decently sized trading cost, and that you just take care of that on the side. What are your thoughts on that, and did you consider any of the even lower cost options that are out there? Actually, the trading cost was originally only $8-10 per trade so we didn’t even have it enter into the transaction from their side. In 2016, Schwab started the Chairman’s Circle and since being made part of that group we have no trading charges at all. Of course, since the only trades I make are to sell stock to satisfy my yearly RMD, reinvest our quarterly AAPL dividends to buy new shares of AAPL or buy AAPL for the custodial accounts, we’re not saving a ton of money that way. One thing I do like however is that when I call Schwab for questions or help, my call is automatically routed to the Chairman’s Circle Team. That doesn’t suck. UPDATED: Schwab Is Back, Aims New Program at Multi-MillionairesCharles Schwab Corp. is about to test Chairman’s Circle, a service to retain ultra-high-net-worth clients who typically migrate to financial institutions with snootier reputations as their wealth increases, company officials said this week.So, bottom line: 1. Chuck doesn't need to know we weren't planning on migrating to financial institutions "with snootier reputations". 2. That's not me smoking the cigar. Thanks for the reply and congratulations on setting a good example for your children. Children are the most important and difficult long-term project one can take on, IMO, and it's unfortunate that many parents don't give it enough of their attention over the long term.
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4aapl
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Post by 4aapl on Jul 13, 2019 7:10:41 GMT -8
Actually, the trading cost was originally only $8-10 per trade so we didn’t even have it enter into the transaction from their side. In 2016, Schwab started the Chairman’s Circle and since being made part of that group we have no trading charges at all. Of course, since the only trades I make are to sell stock to satisfy my yearly RMD, reinvest our quarterly AAPL dividends to buy new shares of AAPL or buy AAPL for the custodial accounts, we’re not saving a ton of money that way. One thing I do like however is that when I call Schwab for questions or help, my call is automatically routed to the Chairman’s Circle Team. That doesn’t suck. Yep, that works. I understand trading costs, when they exist, being minimal for larger accounts and trades. This is why I haven't pushed TDAmeritrade to give me a better deal on that front, since these days across all accounts I'm often making less than 10 trades per year (I really can't remember if I made any trades last year other than a chunk of SPY in Feb and a chunk of AAPL late in the year, but I might have reinvested some dividends). But I'll talk to them again the next time they call. OTOH, especially if you weren't limiting the account choices to AAPL, it could be handy to introduce the concept of trading costs at some point, since a $10 fee on both sides of a $500 trade becomes a bit more important than on a $50k transaction. For those that are interested in the Kids Roth IRA, and no tax for a dependent below a certain level, this article from Investors Business Daily was helpful and had links to relevant places with more details. The main takeaway is that even at $1k/year for 10 years, and at relatively modest returns, that compounds into a decent retirement account that can still be accessed for certain things. As a bonus, it sidesteps taxes, when below certain levels while being earned (generally kids don't have to file taxes if they make less than $12k and don't have a bunch of unearned income (i.e. dividends)), and completely when withdrawn within plan rules. That helps even more in states with a high income tax. There are limits. With the Roth, contributions can only take place up to the amount of earned income, or $6k, whichever is less. And with younger kids, there are child work laws. Generally they can't work until they are 14, and can't be in higher risk jobs until later than that. That's a good thing. But they can work for their parents or their parents business, presumably at any age. But babysitting or minor chores around a private home are allowed too, as is gathering evergreens. No matter the plan used, I like the plan to attempt to educate the kids at a young age, both about investing and trying to show the advantages of holding for the longer term, through the ups and downs along the way. I remember we had a week or two long program towards the end of high school in our US History class where we picked stocks. But it was a daily thing with no trading costs based on the previous day's closing prices, so there was a lot of people trading every day, and some listening to a walk man to hear when was doing well that day (while buying at previous day prices). This "study" didn't have enough time component in it. I could see making a very long term program for a school, covering many years, maybe letting them decide their investments once a year. If starting it very young (K-3rd?) it could have limited choices, and maybe by high school let them pick any stock. While it seems like a bit much, especially for the youngest kids, it seems like getting the long term mindset and saving vs spending ideas fairly early is good. Plus it might dovetail into Nevada's push for college savings accounts, where they create one for every Kindergartener with something like $50 in it, in hopes that they will convince families to start saving early (while also trying to push the idea of going to college to those that later might not think about it). Seeing what others are doing helps get the ideas moving of what we should do. Thanks again for sharing
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Post by rezonate on Dec 18, 2019 1:52:59 GMT -8
Nice thread. I wish sometimes I hadn't been running all over the planet with the military and had spent time sitting with my grandparents discussing money. Noticed a few comments about the gift tax threshold. As stated above, consult your tax professional, but I'm pretty sure the current $15,000 figure is not a limit. It's just the figure below which you don't have to report anything to the IRS. You can give much much more as a gift every year, you just need to claim the amount above that figure to document impact on the lifetime limit. Found this plain-spoken article to get the conversation started: www.mlrpc.com/articles/irs-increases-annual-gift-tax-exclusion-2018/
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Post by Luckychoices on Jan 9, 2021 14:22:33 GMT -8
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Post by Luckychoices on Jan 9, 2021 14:32:18 GMT -8
Nice thread. I wish sometimes I hadn't been running all over the planet with the military and had spent time sitting with my grandparents discussing money. Noticed a few comments about the gift tax threshold. As stated above, consult your tax professional, but I'm pretty sure the current $15,000 figure is not a limit. It's just the figure below which you don't have to report anything to the IRS. You can give much much more as a gift every year, you just need to claim the amount above that figure to document impact on the lifetime limit. Found this plain-spoken article to get the conversation started: www.mlrpc.com/articles/irs-increases-annual-gift-tax-exclusion-2018/Thanks for posting this, resonate! I don't know how I possibly missed your posting for over a year but it may be an indication I'm losing grey cells at a faster rate than I realized. In any case, I appreciate your post and am now *much* more informed regarding gift taxes.
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Post by Luckychoices on Jul 7, 2021 13:55:24 GMT -8
After AAPL's five-months of disappointing, range-bound behavior, mostly well below it's ATH on 01/26/21, all of us on AFB noticed some long-awaited, upward movement in the share price. I took that opportunity to send a message to the four of our grandchildren for whom we opened custodial accounts back in December of 2014. I had already mentioned the AAPL share price movement to our 18-year-old grandson, who lives locally, and he had responded by using much of his high school graduation money to buy 10 additional shares of AAPL on June 11th at $127.10. This is the message I sent to the 4 grandkids: ======== Hi Guys! Hope you’ll all doing well. If any of you are considering purchasing additional AAPL stock, I wanted to give a heads-up that, after going sideways for the last several months, the AAPL share price is beginning to show signs of life, as shown in the following charts. ======== From the 3 grandkids who had *not* purchased additional AAPL shares in 2021, other than with dividends, I received only one response and it was from our 18-year-old granddaughter who had been living in London, England for 10 years. She wanted me to pick up 3 additional shares for her with her money and, as you can see by our messages enclosed below, she bought at $139.92. My wife and I have been happy we decided to open the custodial accounts for the grandkids and, even though we've purchased the majority of shares in their accounts, we believe it's given them some encouragement to invest their money when possible, and think long-term, not short. Our older granddaughter, who also has lived in London for the last ten years, turns 21 this month and so will be taking custody of her account very soon. Cheers to the AAPL Longs!! 👍 And that now includes our 4 younger grandkids. 😎
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4aapl
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Post by 4aapl on Jul 7, 2021 15:59:08 GMT -8
Overshare much? LOL! I love it, seeing how someone is both trying to pass on information and knowledge, but also some money. I just stopped my and talked for a while to my financial analyst, who is the contact person for all accounts at least $1M at TD in the area. He's a few years younger and with younger kids, but talking about himself, and some of the clients, the general idea is passing along knowledge and responsibility, while potentially not letting the kids know the total overall picture yet. I enjoyed hearing of a family that had roughly double of our total, but who opened an investment account for their son with $10k, while still shielding from him how much they had. In a way it comes down to trying to teach what you can, but realizing that some learning needs to come from first person experiences, both positive and negative. Like some child-upbringing books suggest, the trick is to give responsibility in measured amounts, so that mistakes and even "big" mistakes aren't actually life changing big mistakes like they might be later in life. As I said before, my first step is to open and partially or fully fund our kids ROTH IRA accounts as they start to earn money. In some ways I'd like to fund ones for all of the cousins in the same way. But money is a strange thing, and it's better coming from the grandparents, whether through the power of suggestion for their own funds, or getting them in on the plan and laundering our funds through them. The same goes for my sister's IRA or ROTH, but that would definitely need it to come from my parents, in total or in disguise. Like your signature now lists, "One thing to remember is that there are still limited uses for money." --4aapl. That sounds so familiar Though out of context it's a little different than what I was referring to at the time. Congrats on your positive efforts to educate your grandchildren in the way of finances and investments. I'm sure AAPL will waver at some point, and you can point out the downside and the power of sticking through if confident in the long term prospects of the company. At the same time, two helpful learning points might be to not always have all your eggs in one basket, at least at some level (50%?). And also by spreading investments around into at least a few things, you could help teach that different investments may go at different rates, and have different risk levels. That would help show the downside, and the decision making on if one should hold on through, with a company other than what Apple has become, a pretty huge and steady beast. There's probably more learning points out there, and there's times where I even think about writing a book. Good luck with your continued quest of passing on not just some funds, but the knowledge and interest too!
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Post by Luckychoices on Jul 7, 2021 21:53:04 GMT -8
Sorry. Didn't mean to overshare. I figured the best, most direct way to describe what took place and why, would be to just show the messages that passed between myself and the grandkids. I also figured that those who weren't the least bit interested wouldn't read past the first sentence, whereas those who *were* interested in custodial accounts for children or grandchildren could just quickly scan through the messages. LOL! I love it, seeing how someone is both trying to pass on information and knowledge, but also some money. I just stopped my and talked for a while to my financial analyst, who is the contact person for all accounts at least $1M at TD in the area. He's a few years younger and with younger kids, but talking about himself, and some of the clients, the general idea is passing along knowledge and responsibility, while potentially not letting the kids know the total overall picture yet. I enjoyed hearing of a family that had roughly double of our total, but who opened an investment account for their son with $10k, while still shielding from him how much they had. In a way it comes down to trying to teach what you can, but realizing that some learning needs to come from first person experiences, both positive and negative. Like some child-upbringing books suggest, the trick is to give responsibility in measured amounts, so that mistakes and even "big" mistakes aren't actually life changing big mistakes like they might be later in life. As I said before, my first step is to open and partially or fully fund our kids ROTH IRA accounts as they start to earn money. In some ways I'd like to fund ones for all of the cousins in the same way. But money is a strange thing, and it's better coming from the grandparents, whether through the power of suggestion for their own funds, or getting them in on the plan and laundering our funds through them. The same goes for my sister's IRA or ROTH, but that would definitely need it to come from my parents, in total or in disguise. You've mentioned previously about your intentions to fund your children's Roth IRA accounts and it appears to me that you've determined pretty much how you want to do it. Like your signature now lists, "One thing to remember is that there are still limited uses for money." --4aapl. That sounds so familiar Though out of context it's a little different than what I was referring to at the time. Yes, well, it's obviously *completely* out of context...but I just liked the sound of it when I read it and was confident you wouldn't be sensitive about it. As I'm sure you were confident I wouldn't be upset about your "Overshare much?" comment. Congrats on your positive efforts to educate your grandchildren in the way of finances and investments. I'm sure AAPL will waver at some point, and you can point out the downside and the power of sticking through if confident in the long term prospects of the company. At the same time, two helpful learning points might be to not always have all your eggs in one basket, at least at some level (50%?). And also by spreading investments around into at least a few things, you could help teach that different investments may go at different rates, and have different risk levels. That would help show the downside, and the decision making on if one should hold on through, with a company other than what Apple has become, a pretty huge and steady beast.There's probably more learning points out there, and there's times where I even think about writing a book. Good luck with your continued quest of passing on not just some funds, but the knowledge and interest too! Well, to each his own...and if you think 50% is a good level, you would get no argument from me about how you should invest. As I'm sure you know, many people would set that maximum percentage at 5%, not 50%, hence the "Five Percent Rule": In investment, the five percent rule is a philosophy that says an investor should not allocate more than five percent of their portfolio funds into one security or investment. As for my wife and myself, being 100% invested in AAPL for 20+ years has worked quite well and we have no plans to sell any shares of AAPL except for what I'm required to sell each year to satisfy my RMD. Have we been lucky? Absolutely. Could we have altered our investment strategy any time over those 20 years if AAPL had not proven to be a good investment. Absolutely. If fact, we started out being more diversified in our investing prior to losing ~$100,000 during the Tech Crash. It was only after that experience that we decided to put "all our eggs in one basket"...by putting all that remained of our investment into AAPL.
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4aapl
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Post by 4aapl on Jul 7, 2021 22:35:02 GMT -8
Well, to each his own...and if you think 50% is a good level, you would get no argument from me about how you should invest. As I'm sure you know, many people would set that maximum percentage at 5%, not 50%, hence the "Five Percent Rule": In investment, the five percent rule is a philosophy that says an investor should not allocate more than five percent of their portfolio funds into one security or investment. Today the financial person mentioned the general 5% rule, but he wasn't pushing it, instead understanding that a huge concentration in AAPL had done well for me. It's a lot less risky when at the point where a change by 50%, either way, wouldn't make much difference in how we live. But, it was his feeling that Apple is in such a position that it could do no wrong that worried me. It's when one starts feeling that there is no risk at all, that it is a sure thing, that one gets blindsided. Personally, I feel the last 10-25 years have been special and unique for Apple and AAPL. While my accounts were concentrated and at times even leveraged in AAPL over the last 23+ years, it is not the route I would suggest to most at this point, for AAPL or really any other stock. This is more like the rarity of a college dropout being the CEO of 2 major tech companies, than some standard that dropping out of college and hoping to run a big tech company is the way to go. That said, I don't know what % I would recommend to someone as the maximum they should invest in a single company, even if they have a strong conviction. It really depends on the situation, including if they are willing to lose the money if it doesn't work out. One of the big things that let me take on that high concentration risk was that I had a separate 401k that I was funding appropriately, such that with standard average returns and compounding for 40 years, I could expect to have a decent standard retirement. Having that safety net in place, and being young and single with a decent job and a good degree, I could be more risky in my other investments. I guess that goes into long term planning, with tangents on realistic expectations, risk levels, and compounding interest. "The Richest Man in Babylon" is a simple book on the power of consistent saving and compounding. Any book on various crashes is a good one on reminding about risk levels and realistic expectations (I like "Manias, Panics and Crashes"), though even looking at recent events like Real Estate in 2008, Bitcoin in 2018 or 2019, or Lumber in the last 12 months would be handy. It doesn't have to be a permanent revaluation, but times where things get overexcited and then reset are important to at least somewhat understand, so one can attempt to not get swept up in the later part of the frothy top of a mania. But that's just me, trying to help share the knowledge that I wish I had previously, instead of having to learn it first hand. It could be that most people are similar, that they really have to learn it first hand for a real understanding of their risk levels, and reaction to events that are rare and often seem illogical.
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aapl
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Post by aapl on Jul 29, 2023 5:38:56 GMT -8
A suggestion on your $1000 and matching contributions is to do these as transfers of your most highly appreciated AAPL stock from your taxable investment account. And then sometime during the year do a sell + immediate rebuy of whatever quantity of shares that it takes to book $1,100 in capital gains. I'm doing this for my grandkids as anything under the $1,100 limit is taxed at 0%. Another bonus: having the kids file a tax return is another experience they get to learn about.
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Post by Luckychoices on Jul 29, 2023 17:22:20 GMT -8
A suggestion on your $1000 and matching contributions is to do these as transfers of your most highly appreciated AAPL stock from your taxable investment account. And then sometime during the year do a sell + immediate rebuy of whatever quantity of shares that it takes to book $1,100 in capital gains. I'm doing this for my grandkids as anything under the $1,100 limit is taxed at 0%. Another bonus: having the kids file a tax return is another experience they get to learn about. Thanks, aapl, that's a great suggestion...and one I certainly didn't think of doing. We started their accounts in December of 2014 and now the youngest of the four is almost 18 years old and has 622 shares...the oldest of the three remaining in the custodial account will be 21 this year and has 735.9 shares. They were all fortunate to benefit from the 4-1 split in 2020 and have had addition shares purchased with their quarterly dividends. My wife and I have gotten to the point now where we no longer add shares to their accounts figuring that they should know by now that investing their money is the way to go. The lowest return has been from the grandchild who'd contributed the least, 151% and the other accounts have seen gains of 203%, 277% and 282% depending on how much they invested and when. Thanks again for your suggestion! It would certainly help someone who's considering setting up custodial accounts for their grandkids.
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4aapl
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Post by 4aapl on Jul 30, 2023 14:16:41 GMT -8
A suggestion on your $1000 and matching contributions is to do these as transfers of your most highly appreciated AAPL stock from your taxable investment account. And then sometime during the year do a sell + immediate rebuy of whatever quantity of shares that it takes to book $1,100 in capital gains. I'm doing this for my grandkids as anything under the $1,100 limit is taxed at 0%. Another bonus: having the kids file a tax return is another experience they get to learn about. I guess I've read too many things about too many parts of the tax code, and so this is confusing to me. For some reason I thought you had to cash out stocks before gifting them, though this doesn't seem to match what one would expect for other items. Instead, is it that you pass on the basis, in cases where you are making a gift but haven't passed away? I have some shares at a basis of around $25, so let's say I give 50 to my kids (keeping below the annual gift limit) and then sell them at the simplified current price of $200, then they could sell 6 while staying below the $1100 profit/year limit, right? (they'd also have to keep the dividends combined with profit below that level, if I remember right, so selling 6 shares at a 175 profit per share, plus roughly $1/share dividend, would put them right at that $1100 limit) I guess that all makes sense, if the cost basis transfers. Given that, I'm guessing that I can't contribute appreciated shares to a ROTH, since that would be skipping out on taxing the appreciation. That was probably what had me confused.
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aapl
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Post by aapl on Jul 30, 2023 17:32:29 GMT -8
No, you do not have to cash out stocks before giving them away. The cost basis travels with the shares.
Yes, if those shares have a cost basis of $25, then the kids can do a sell/rebuy of 6 shares to book a long term capital gain of $1,050 which is taxed at 0%. They could also sell another 6 shares for another gain of $1,050 for a total gain of $2,100. The first $1,100 is taxed at 0% and remaining $1,000 is taxed at 14% (the kiddie tax). Anything above $2,200 is taxed at parents marginal rate.
I think you are right if you were referring to contributing appreciated shares from your taxable investment account. But you can transfer appreciated stock from your taxable IRA into a ROTH via a Roth conversion. This conversion is taxed as income and valued at the closing price on day of transfer. Our accounts are at Fidelity where Roth conversions can be entered after the market closes. So when I decide I'm doing some conversions, I do some market timing and do them on days when Mr. Market has a hissy-fit and Apple drops by a couple percent.
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4aapl
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Post by 4aapl on Jul 31, 2023 13:04:17 GMT -8
I think you are right if you were referring to contributing appreciated shares from your taxable investment account. But you can transfer appreciated stock from your taxable IRA into a ROTH via a Roth conversion. This conversion is taxed as income and valued at the closing price on day of transfer. Our accounts are at Fidelity where Roth conversions can be entered after the market closes. So when I decide I'm doing some conversions, I do some market timing and do them on days when Mr. Market has a hissy-fit and Apple drops by a couple percent. I did a Roth conversion of my IRA back at the end of 2007, near the market low. It has been invested in AAPL, at or near 100% at all times, so it has done very well. We have a few non-Roths floating around with tiny amounts in them. There's no reason to bother converting them, both because they are trivial in current sizing in comparison, and it's good to have a combination of pre and post tax accounts to draw from if you wanted to fine tune the situation. FWIW, if tax rates and brackets are near constant, as a whole there is no benefit or penalty to converting. If you make a spreadsheet using the same variables, you get the exact same end value. OTOH, if you time it a little by converting near a low, you expect rates will increase, or you expect total rates could increase due to additional state income tax, it can be advantageous. We converted after we moved to NV. While we don't have plans to move back to CA or to HI, and could just as easily move to WA if we were moving, it's nice to know that the big chunk in our Roth is tax free. And while it's possible that the laws could change, it's also possible that the government takes your house to build a freeway, or for that matter that the earth is blown up to make room for an intergalactic superhighway. But the odds on any of that are relatively low enough that it's best just to not worry about it too much.
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mark
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Post by mark on Jul 31, 2023 15:32:35 GMT -8
Another way to state that rule is "sell your winners and keep your losers". Does that ever make sense?
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