From Piggy Bank to Portfolio: 5 Ways to Invest for Your Child

At 1 Million Seeds, we’re building a movement of parents who are intentional about giving their children a financial head start. Our vision is to see 1,000 families build $1 million portfolios for their kids by 2040.

Sounds ambitious, right? But it’s more possible than you think, especially if you start investing for your kids now.

5 Simple Investment Paths We Recommend:

1. 529 Education Savings Plan
If your dream is for your kids to go to college debt-free, then you want to start with a 529 education savings plan.

 A 529 plan is a tax-advantaged investment account specifically for education expenses.

• Your contributions grow tax-free.

• Withdrawals are also tax-free when used for qualified education expenses like college tuition, textbooks, or even some K–12 tuition.

• You can’t directly buy individual stocks; instead, you choose from pre-selected investment portfolios (typically mutual funds).

• Some states offer additional tax deductions or credits for contributing.

📌 “Tax-free growth” means not just the money you put in, but the entire portfolio (the gains, dividends, interest — all of it) grows without being taxed.

2. Roth IRA for Minors

This one’s for the super planners — if your goal is to help your child retire well and they’ve earned income (from babysitting, working at your business, or a summer job), you can open a Roth IRA in their name.

• You contribute on their behalf, and that money grows tax-free, and withdrawals in retirement are tax-free (if conditions are met).

• Funds can be invested in individual stocks, mutual funds, ETFs, or bonds.

• Although meant for retirement, contributions (not earnings) can be withdrawn early for certain expenses, including college or a first-time home purchase.

• At age 59½, your child can withdraw that money tax-free. 

📝 No earned income = no Roth IRA. It’s strictly for kids who’ve actually made money.

3. Custodial Brokerage Account (UTMA/UGMA)
If your goal is maximum flexibility — maybe to invest in their future business, help them buy a house, or fund their wedding — this is your best friend. A custodial account allows you to invest on your child’s behalf until they reach the age of majority (usually 18 or 21, depending on your state).

• You can invest in stocks, ETFs, bonds, mutual funds — just like a regular brokerage account.

• No specific restrictions on how the funds are used, as long as it benefits the child.

• There are some tax advantages, but it’s not as tax-sheltered as a 529 or Roth IRA.

• Once your child reaches legal adulthood, they gain full control of the account.

Best For: Flexible investing and teaching kids about stock ownership early.

⚠️ Heads up: once they hit that age, they get full control — whether they want to use it for a laptop or a Lamborghini.

4. Parent-Owned Brokerage Account (with Intent to Gift)
If you’re not ready to give your child direct access to the money, or maybe they aren’t even born yet, this gives you full control. You invest under your name, and later, when the time is right, you gift it to your child (or use it for them).

• Full control remains with the parent.

• You can gift the investments or proceeds to your child later (with potential gift tax considerations).

• Offers complete flexibility in how and when funds are used or transferred.

Best For: Parents who want to retain control and flexibility but still invest with their child's future in mind.

🔑 This one is about freedom. You decide how much, when, and whether they’re ready.

5. ABLE Savings Account (for eligible children with disabilities)
If your child has a disability diagnosed before age 26, an ABLE account is a game-changer. An ABLE account (Achieving a Better Life Experience) is a tax-advantaged account that allows you to save and invest for their future

• Contributions grow tax-free, and withdrawals are tax-free if used for qualified disability-related expenses.

• Funds can be used for education, housing, health, transportation, and more.

• Does not impact eligibility for Medicaid or Supplemental Security Income (within limits).

Best For: Parents of children with qualifying disabilities who want to save for their child’s long-term independence.

💡 Think housing, education, medical care, transportation — basically anything that supports their well-being and independence.

Final Thought
No single account fits every family — and you don’t have to pick just one. Many of our 1 Million Seeds families combine accounts based on their goals, income level, and family needs. The key is to start. The earlier you invest for your child, the more time their money has to grow. 

Whether you're planting a seed for college, retirement, or long-term wealth, consistent investing and the right knowledge will help your kids grow up with options, not just obligations.

Checklist: Are You Ready to Invest for Your Kids?

If you’re a parent, you’ve probably had a moment where you thought:

“I want my kids to have a better future than I had”

Or, “I want them to have a financial start that’s higher than where I started.”

And guess what… investing early for your kids is one of the most powerful ways to make that happen.

But before you invest for them, there’s one principle to remember:

💡 You can’t water tomorrow’s seeds if you don’t have enough to drink today.

In practical terms: you need to make sure your own financial foundation is strong enough to support consistent investments for your child, without sacrificing your own peace, stability, or future.

So how do you know if you’re truly ready?

Here’s a simple 4-part framework to help families answer that question with clarity and confidence.

TL;DR — Your Readiness Checklist

✅ 1. Have your paid off all high-interest debt and loans?

✅ 2. Do you have 3–6 months of emergency savings?

✅ 3. Do you have money left over after your monthly expenses?

✅ 4. Are you already investing for yourself?

If you can confidently answer “yes” to these questions, you’re ready to start investing for your kids.

If you want to do this with a group of parents, then join the waitlist for next 1 Million Seeds cohort.

Let’s Dive into the Details of The 4-Part Framework

1. Have You Paid Off High-interest Debt And Loans?

Let’s be clear: you don’t have to be completely debt-free to invest for your kids. That’s a myth that holds a lot of people back. The key is understanding what kind of debt you have:

• High-interest debt = Red flag 🚩Don’t even think about investing as these can wipe out investment gains and create constant financial pressure.

• Low-interest or strategic debt = Proceed with caution ⚠️. Have a solid repayment plan in place.

Type of Debt	Ready to invest?
Credit Cards	❌ No – Pay off first
Payday / Title loans	❌ No – Pay off first
Personal loans	❌ No – Pay off first
Medical debt	❌ No – Pay off first
Student loans	⚠️ Proceed with caution if debt is manageable
Auto loans	✅ Yes – can invest while paying
Mortgage	✅ Yes – can invest while paying
Business or Investment loans	✅ Yes – if paid off by business revenue

💬 EXPLANATION: 

Paying off debt before investing for your child is like plugging a leak before trying to fill a bucket. Investment gains don’t mean much if your finances are leaking out faster than they’re growing. 

Why it matters:

1. Interest kills growth: 18–30% credit card interest vs. 7–10% stock market returns? That’s a losing game, so don’t invest in a sinking boat.

2. Debt creates anxiety: Monthly payments limit your flexibility and adds stress. But eliminating debt buys you peace of mind, and peace makes room for better long-term decisions.

3. Kids learn by watching: Show them how to manage money before by paying off your debt, budgeting, and living within your means. Involve them in these conversations early.

Debt makes you fragile: Emergencies happen and if you haven’t handled your debt, any investment for your child could end up becoming your emergency fund. So secure your position first so your child’s investment can grow uninterrupted.

2. Do You Have 3–6 Months of Living Expenses Saved?

Emergencies are part of life and without a cushion, even a small bump in the road could force you to withdraw money from your child’s investment.

Having an emergency fund isn’t just about protecting yourself, it’s about protecting your child’s future.

Question	Ready to invest?
Do you have 3-6 months of living expenses saved up?	If No – ❌ build your emergency savings first If Yes – ✅ ready to invest

💬 EXPLANATION: You don’t take a long-distance roadtrip without a spare tire in the trunk, a full tank of gas, and working brakes. An emergency fund isn’t just a buffer, it’s the foundation. Without it, every financial surprise becomes a crisis, and crises kill momentum.

Why it matters:

• Emergencies are inevitable: Medical bills, job loss, car trouble... these happen to everyone. Your emergency fund keeps you from pulling money out of your child’s investments when life throws a curveball. 

• Investments are long-term, but emergencies are immediate: You shouldn’t pull them at a time of crisis otherwise you risk incurring losses and/or paying penalties. Your emergency fund protects you from these losses.

• Peace of mind fuels generosity: When you’re not constantly on edge, you think clearer and plan better. Parents who feel secure make more generous, strategic decisions for their kids and themselves.

Don’t be discouraged if you don’t yet have 3 to 6 months savings yet, this should be your immediate next step.

3. Do You Have Extra Money After Monthly Essentials?

After paying your bills, do you still have money left? This is called financial margin – the space between your income and your expenses. If there’s no room, your child’s investments will always feel like a burden, and you will always feel stressed.

Question	Ready to invest?
Do you have a monthly budget?	If No – ❌ create a budget If Yes – ✅ see next question
Are monthly expenses lower than monthly income?	If No – ❌ cut expenses or raise income If Yes – ✅ you’re ready!

💬 EXPLANATION: Investing for your kids needs to come from what is left over financially after covering your family’s needs. Without margin in your budget, their investment will compete with daily survival.

Why it matters:

• Bills come first: Kids’ accounts shouldn’t compete with the electric bill. Investing for them should not make you feel like you’re in a pressure cooker.

• Giving should come from abundance: If your personal finances are insufficient, giving to your kids will not feel like a strategy. Your kids are watching and learning, and if you give to them while you're struggling, they may associate giving with pressure instead of joy. 

• Margin = flexibility: Life throws curveballs; margin helps you adapt and stay consistent while you ride out emergencies, job shifts, or life changes.

• Margin prevents guilt: Skipping a contribution when money’s tight can feel like failure. Margin protects you from the soul sucking feeling of guilt and shame.

Margin is where legacy grows. Let’s build that space, then we can plant the seeds.

4. Are You Already Investing for Yourself?

It might feel noble to prioritize your kids over yourself. But when it comes to investing and building wealth, it can actually backfire.

💡Like the flight attendant’s instructions on a plane, you have to first secure your own oxygen mask before helping your kid.

Type of Investment	Ready to invest?
No investments at all	No – ❌ first start investing for yourself
Retirement account - e.g. 401K, Roth IRA etc.	If No – ❌ first setup a retirement account If Yes – ✅ can invest for kids
Other investments - e.g. real estate, brokerage etc.	⚠️ as long as you have a retirement account, then you can invest for kids

💬 EXPLANATION: You can’t build a guest house, when the main house is still under construction. You need to secure your future first before you think about securing your kids’ own.

• Your retirement comes first: If you don’t invest for yourself, your child may one day have to support you financially, which undercuts the legacy you’re trying to build.

• You can’t pour from an empty cup. Financial stability for yourself gives you freedom to help your child later in life.

• Compound interest works for everyone: The earlier you invest for yourself, the more powerful your investments can eventually help your child too.

• Modeling is more powerful than words: Kids learn by watching you. It’s better to model investing discipline than to set up a custodial account you never contribute to consistently.

Remember, you are your child's first safety net, not the other way around. 

Final Thoughts

Don’t worry if you can’t check every box today. This isn’t about shame—it’s about readiness.

At 1 Million Seeds, we believe that when you build a strong financial foundation first, you can plant seeds with confidence.

Ready to start investing for your kids? Join the waitlist for the 1 Million Seeds Community here.