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• Although meant for retirement, contributions (not earnings) can be withdrawn early for certain expenses, including college or a first-time home purchase.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