House And Car Purchases
Kevin wants to know the best method of saving for a car and house down payment and college for his kids.
QUESTION: Kevin wants to save money for his kids’ college, but also wants to save to buy them a car and help them with a house down payment. What’s the best method of saving for the car and house?
ANSWER: Just save in a mutual fund. Build some wealth, and you’ll be in a position to help them. If you put it in their child’s name, it won’t be taxed for a while. Put it in an UTMA (uniform transfer to minors), which means mom and dad are the account custodians. Then, when the child turns 21, the money is theirs. Also, I don’t believe in buying cars for the kids. Have them save up money and then maybe match them dollar for dollar. It’s a very good idea for them to have some money tied up in the car.