Introduction
As a parent or guardian, you want to ensure that your child’s future is secure. One way to do this is by setting up a custodial account. Fidelity is one of the most popular brokerage firms that offer these types of accounts. In this article, we will discuss what a custodial account is, how it works, and the benefits of using Fidelity for your child’s future.
What is a Custodial Account?
A custodial account is a savings or investment account that is set up for a minor child. The account is managed by a custodian, who is often the child’s parent or legal guardian. The purpose of the account is to provide financial security for the child’s future, such as paying for college or buying a first car.
How Does a Custodial Account Work?
The custodian manages the account until the child reaches the age of majority, which is typically 18 or 21 depending on the state. The custodian has the authority to make investment decisions on behalf of the child until they reach the age of majority. Once the child reaches the age of majority, they have full control over the account.
What are the Benefits of using Fidelity for your Custodial Account?
Fidelity is a trusted brokerage firm that offers a wide range of investment options for custodial accounts. Some of the benefits of using Fidelity for your child’s custodial account include:
Low Fees
Fidelity offers low fees for their custodial accounts, making it an affordable option for parents and guardians.
Investment Options
Fidelity offers a wide range of investment options, including stocks, bonds, mutual funds, and ETFs. This allows parents and guardians to create a diversified portfolio that can grow over time.
Expert Advice
Fidelity has a team of experts who can provide guidance on investment decisions. This can be especially helpful for parents and guardians who may not have experience with investing.
How to Open a Custodial Account with Fidelity
Opening a custodial account with Fidelity is easy. Here are the steps:
Step 1: Choose the Type of Account
Fidelity offers two types of custodial accounts: Uniform Gifts to Minors Act (UGMA) and Uniform Transfers to Minors Act (UTMA).
Step 2: Gather Required Information
You will need to provide personal information for both the custodian and the minor child.
Step 3: Fund the Account
You can fund the account with cash, securities, or other assets.
Step 4: Manage the Account
Once the account is set up, you can manage it online or through Fidelity’s mobile app.
Conclusion
A custodial account can be a great way to provide financial security for your child’s future. Fidelity is a trusted brokerage firm that offers low fees, a wide range of investment options, and expert advice. If you are considering opening a custodial account for your child, Fidelity is worth considering.