By an eHow Contributor
Parents, don't worry about the rising costs of sending your children to college. Don't fret over making sure your child gets the proper education and schooling to go on to get some great job that pays six figures right out of school. You also needn't stress out that your child will get the opportunity to become a movie star or famous pop singer, or even win the lottery. Yes, all of these scenarios would likely help your child end up wealthy in the years to come, but there's an easier way to make your child rich. It has to do with time and money and investing wisely. This article will show you how to make your child have lots of money and be rich
Instructions
Things You'll Need
- Money to invest monthly for your child
- Time for your child to wait to become rich
- Places to invest the money for your child
- 1To make your child rich, you will be using the time value of money. If you start saving today when your child is still an infant, by the time your child reaches adulthood, he or she will have a substantial amount of money. Keep that money for ten or twenty more years past reaching age 21, and the child could be a millionaire!
- 2Determine tentatively how much money you have each month to invest for making your child rich. Do you have $50, $100 or even $200?
- 3Find a money savings calculator online and do some calculations to determine how much your child will have with these regular investments by age 21 at varying rates of interest. For instance, if you invest $200 per month for 21 years at 10% interest, you will have roughly $170,000 at the end of the 21 years.
- 4If you want your child to have one million dollars at age 21, you will need to invest about $1200 per month starting when the child is born and get a 10% rate of return on the money.
- 5If you find that the money you can invest isn't going to be enough to make the child rich, then you will need to come up with more money to invest each month. Or, you could start with an initial amount in a lump sum, adding to it each month. The more money you have up front to invest, the faster the earnings start to grow.
- 6Once you figure out how much you have to invest, you need to decide where to invest the money. Mutual funds are a good option, especially long term oriented growth funds of larger companies. You can speak to a financial advisor to determine which mutual funds are best for your purposes.
- 7To play it really safe, you could stick to bonds or certificates of deposits. But then, you would have to wait many extra years for your child to become rich, since the interest rates will generally be lower.
- 8You can put some of the money into a 529 college savings plan if you want your child to be not only financially wealthy, but also educationally wealthy. This way, the invested money can grow to help fund the growing costs of college when the child reaches college age.
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Tips & Warnings
- Find the best investment that will provide consistent returns at the highest interest rate over time.
- Mutual funds with a proven track record are safer than investing in stocks.
- Through most of America's history, the overall rate of growth in the economy has been about ten percent, so if you can find a mutual fund delivering this type of return, this will be a good bet for helping make your child rich.
- Beware placing your monthly investment into something that is too risky, as this could mean you could lose all of your money.
- It may be enticing to put money into a new hot stock, but if the company never becomes successful, not only will you not see the dollars grow, but you could lose part or all of the investment!
- Make sure you speak with an investment advisor before you start any investment plan. Don't just assume you know enough on your own to make a wise investment decision with this type of money!
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