Search Results for: real estate

Ready to Try Your Hand at Passive Income? Here’s How to Find Great Real Estate Deals

“Money for nothin’ and chicks for free.” 

We’re not too sure about free chicks, but most people are pretty excited about getting money without working for it. “Passive income” sounds like earning money for little to no effort. The reality, however, is that you put in the work up front. 

Real estate investing is a common way to build up assets that can pay you over time. Buying property has always been a solid investment.

When you talk to owners or realtors, remember that you aren’t the only one in your area looking for a good deal. You will have to have a few tricks to get in on those extra special properties before anyone else.

How will you find the real estate deals of your dreams?

Like this.

Drive Around

Knowing an area well will help you with your investment strategy. You also don’t want to drive three hours away if something happens with your property. 

When you drive around, look for houses that could use a little love. Look for the telltale signs.

  • Overgrown grass
  • Tarps on the roof
  • Old mail in the mailbox
  • Worsening condition over time

These signs indicate that the place could be empty or that the owner cannot afford to fix the place up. 

Write down the address, do some digging, and reach out to the owner. See if they want to sell.

Check Eviction Records

Most counties will have some public record of evictions that are being processed. Evictions are terrible for landlords. If you can be the answer to their property woes, you could get a great deal.

Once you find out where evictions are happening, you can find the landlord’s information. Then it is a matter of calling or sending a letter to show your interest.

Search Craigslist

Look at the rentals. Keep an eye out for landlords that seem like they could be your average Joe/Jane. They will typically have their phone number in the ad.

Your expressed interest to buy may not be right for them, but hold on. Landlords may have another property they are looking to sell. Being the first offer puts you in the winner’s position.

Collect a Lot of Real Estate Deals

You want to look at a lot of potential deals. Don’t jump at the first property that seems nice.

There are many types of properties to consider. Your next deal could be a single family home, small storefront, or multi-family real estate. You can be smart by creating a funnel for finding bargains.

Here’s what to do:

  1. Search properties with the three tips above (you can also get listings from wholesalers and real estate agents)
  2. Collect 50-100 properties (Not so passive anymore, is it?)
  3. Get down to 10-30 properties to go look at
  4. Make offers on 5-20 of those listings

Get Ready for Business

Once you show up, get ready to pitch your deal and negotiate. Be considerate and honest. Remember that you are dealing with people who also need to feed their families.

Knowing about the many areas involved in real estate will help you be confident in your dealings. If you are not that savvy, bring along someone who is. 

It’s Getting Good for Buyers

After coming through the housing bubble of 2008, the market has become increasingly competitive. More buyers are confident enough to make an offer.

Now, things are looking good for buyers in the future. Signs suggest we’re entering a buyer’s market. Real estate deals will be easier to find. Let’s hope you find one of these gems in your area. 

Want to learn more to help you in your real estate investing? We’ve got more for you here!

8 Tips For Negotiating the Best Real Estate Deals

real estate deals

So you’re ready to buy a piece of real estate.

Or maybe you have property to sell. Whether you’re a buying or selling, you should work with a real estate agent. Here’s why.

Negotiation skills matter a lot. Great real estate deals are only available to powerful negotiators. If you buckle too easily, you risk being taken advantage of by knowledgeable buyers or forceful sellers.

Here are 8 tips that you need to master before you negotiate your next real estate transaction.

1. Hire A Good Real Estate Agent

A bad real estate agent can cost you tens of thousands of dollars.

Spend time choosing your agent. A strong choice will pay off your investment tenfold. The person you choose should have shark-like negotiation skills needed to secure good real estate deals.

Interview your choices, preferably in person. A seasoned, experienced agent will be able to answer all of your questions.

2. Understand the Neighborhood

Real estate deals depend on the neighborhood. If you don’t know how much the neighbor’s house sold for, you won’t know how much your house is worth. Become an expert in the neighborhood.

If you’re selling your house, you’ll get a better deal if you price the home to suit the neighborhood. Your Realtor(R) should be able to help you.

If you’re buying a property, become an expert in its location. Visit at all hours of the day. The charming neighborhood may seem quite different at night when most of the partying residents are home.

Are there any good schools nearby? Even if you don’t have kids, your proximity to quality schools affects your home value.

Your real estate agent should be able to answer most of your questions about the neighborhood. Choose someone who is well-respected in the area.

Searching for a vacation home near Disneyland? Choose Jeeves Realty. Looking for a fabulous loft in Cancun? Choose a Realtor(R) who’s based nearby.

3. It’s Not Real Unless It’s In Writing

In real estate, words are meaningless until they’re put on paper. Don’t depend on verbal contracts. If you haven’t signed your name to it, the agreement doesn’t exist.

Sellers sometimes lure buyers by feeding them false hope. Once offers start flying in, the seller manufactures a bidding war to entice desirable buyers. Don’t get your hopes set on a single property.

4. Don’t Be Discouraged By Friction

Negotiations only end quickly if one person is making a mistake. If buyers leap at your price, you’re probably asking for too little. By the same reasoning, buyers should be wary if the seller is too eager to close the deal.

If the entire negotiation goes smoothly, it might mean you could have gotten a better deal. Be cooperative but don’t bend over backward to make the other party happy. It’s ok if there’s a little friction

5. Someone Has to Get the Last Concession — Make Sure It’s You

Here’s a simple rule to remember during the negotiation process- always get the last concession.

A concession in real estate is anything that sweetens the deal. You might be able to convince the seller to repaint the property’s walls or perhaps install new flooring. Realtors(R) often negotiate for the seller to cover entire closing costs.

If you always demand the last concession, the other party will quickly learn to stop trying to get extra goodies. She’ll realize that nothing that she wants is free. If she’s going to ask you to give something up, you’re going to do the same to her.

For example, during the last round of negotiations, instead of announcing that you’re happy with the proposed price, say that you agree, as long as you can have one last thing.

Perhaps you want the contractor to finish sooner. Maybe you want a couple of appliances thrown into the deal. It doesn’t matter what it is.

6. Remember: You’re Buying a House, Not Choosing a Life Partner

If you’re buying a house, focus on what you’re trying to do. Great real estate deals aren’t made based on emotions. You might be in love with the cozy breakfast nook or the spacious backyard, but don’t let that blind you.

Real estate investments are tricky, so you need to go into them with your eyes open. A bad financial decision can take years to recover from.

7. Real Estate Deals Depend On The Market

The type of deal that you’ll be able to negotiate depends on the market conditions.

Buyer’s Market

A buyer’s market means that there are more homes on the market than homebuyers. It’s the best time to be a buyer, so push your advantages.

If you’re trying to sell a house in a buyer’s market, you need to be flexible. Properties may take longer to sell. Buyers might demand that you lower your listing price.

Seller’s Market

In a seller’s market, buyers fight for a limited number of homes.

If you’re trying to buy a house, understand that the seller has the advantage. If you’re tangled in a bidding war, trying to convince the seller to cover the closing costs or take a couple thousand dollars off the final price probably won’t work.

8. Get a Home Inspection

Hire a home inspector. It’ll cost a couple hundred dollars upfront but it could potentially save you thousands. A home inspector will give you an unbiased opinion about the property and any issues it has.

Here’s what you need to do if you’re the buyer:

If you’re the seller, you should:

  • Prepare your home
  • Get a presale inspection

Thinking About Buying Or Selling A Piece Of Real Estate?

Everything is negotiable. Choose a real estate agent with fearsome deal-making skills and you might walk away with a great deal whether you’re buying or selling.

Practice before you come to the negotiation table. Prepare yourself mentally for battle. If you don’t fight for what you want in real estate, you’re not going to get it.

There are others ways that you can prepare to make a great investment. Poke around on our site to discover more tips.

Why You Should Invest in Getting Your Real Estate License

real estate licenseIf you’ve ever considered working towards your real estate license, you’re in good company. As of June 2017, there were a total of 415,458 real estate licensees, including brokers and salespeople.

Even if you don’t have prior experience in the field, a career in real estate is possible for anyone. It’s important to note, though, that passing the exam to get your real estate license does require work.

Choosing to invest the time in getting a real estate license could have a significant payoff for your future and the future of your family. Working in real estate offers many benefits, in addition to a fulfilling career.

Below, we’re reviewing the top reasons why getting your license to work in real estate is a worthwhile investment.

Read on to learn what you can get out of the job, and how becoming a real estate agent can benefit you and your family.

1. Get Access To MLS Deals With A Real Estate License

The ability to legitimately access your local Multiple Listing Service, or MLS, is one of the biggest benefits to getting your real estate license.

If you’re interested in acquiring multiple properties or purchasing a rental property, this could be a huge asset to you. You won’t have to rely on an agent or Realtor to notify you about new deals because you’ll hear about them as soon as they are posted.

That will give you a competitive edge over others in your area who may be interested in similar properties, but don’t have a real estate license themselves. Rather than getting word of a good deal every few months, you’ll have access to all the local deals that are available.

You can make an offer as quickly as possible, and secure the perfect property or properties for your needs.

2. Flexible Income And Hours

While real estate can be a fulfilling career, you don’t have to work full time to make it worth it to get your license. If your goal is to earn a little extra income — rather than to support your family full time — real estate is a great way to accomplish that.

Once you have your license, you can choose how many listings you take on based on your income goals for that month. If you’re saving up for an expensive item or luxury vacation, you can list more houses. If you don’t have any pressing financial needs, you can take a month off.

How much you choose to work is entirely up to you, which also makes it a great career option for parents or anyone who wants flexibility during the day.

A career in real estate is not a 9-5, in the office kind of position. Your schedule will depend on your listings, and while it’s important to be available to your clients, you will still have time during the day to get other things done.

You can also choose to start smaller with fewer listings, and then scale up as you gain more experience and your client base grows.

3. Build Strong Community Relationships

Working as a real estate agent or broker is much more than a desk job. It requires you to be out in your community on a daily basis, which provides you with a great opportunity to make connections and build relationships.

Open houses will give you the chance to meet members of your own community, including your own neighbors and people who are new in town and looking for a home. Your success in real estate can depend a lot on client recommendations and word of mouth, so it’s important to build strong relationships whenever you can.

Networking events will also help you meet others in the real estate industry, who could learn from or potentially work with in the future.

Meeting more people can help you close more deals, but the benefits of being an active member of your community go far beyond business. Through your work in real estate, you’ll have the opportunity to get to know people you would never have met otherwise.

4. Make Dreams Come True

So many of us have the same goal for our career: we want to do something that can make a meaningful impact on another person. Working in real estate can empower you to do just that.

As a real estate agent or broker, you’ll have the opportunity to assist first time buyers, who have been working hard to find American dream homes for their families. You can develop a relationship with your clients that’s hard to find in other fields.

Once you get your real estate license and are working in the field, you’ll find that selling homes is about so much more than the commission. It’s about helping people find a place that’s theirs and making their dream of becoming a homeowner come true.

5. You Can Work Anywhere

Life is unpredictable, and it’s hard to know with certainty where you’re going to be in a year, or five or ten. That’s why a career in real estate is such a practical choice — it can be done anywhere.

Each state does have its own requirements that you’ll have to meet in order to get your real estate license, but once you’ve gotten your license in one state, you’re better prepared to work anywhere.

Working in real estate is also a great way to get to know a new area if you do move. You’ll quickly get a sense of different neighborhoods, and will have many opportunities to meet different people.

Want More Flexible Career Options?

Once you have your real estate license, there are lots of ways you can use it to design a flexible career for yourself and earn additional income for your family.

Having a job where you’re able to work when you want to can be extremely important, especially if you’re also trying to juggle the demands that come with being a busy parent.

For more information flexible ways that you can earn additional income for your family, please contact me at any time.

For Sale By Owner vs Realtor: Which is Right for You?

for sale by owner vs realtorSelling your house is one of the most intense times for your finances. No matter what your home’s price range might be, it’s one of the largest transactions you’ll ever make you so want to get it right.

Of the many decisions you’ll make along the way, the one that has the largest effect is to list your home for sale by owner vs realtor-listed. If you’re still trying to make that choice, these pros and cons can help.

For Sale By Owner Vs Realtor: The Pros and Cons

Do you try to take on the home-selling journey yourself or do you trust it to someone you don’t know? Here’s how to decide.

Pros and Cons of Selling Your Own House

If you’re thinking about the “for sale by owner” or FSBO route, here are the pros and cons to consider:

Pro: No Commission Payout

The largest reason homeowners choose FSBO is to save on the commission cost. As you’re adding up your expenses for the home sale, that commission is a big number to cut out if you can.

Pro: You Control the Whole Process

The fact is that selling your home can be intrusive, with agents and buyers poking their heads into every nook and cranny of the house. For some homeowners, listing the home themselves gives them more privacy.

Con: Potential for a Lower Sale Price

As much as you know about your home, you don’t know the market as well as a real estate agent does. There’s a high likelihood that you won’t be able to negotiate as high of a sale price as an agent could.

Con: More Likely to Have a Slower Sale

On top of the final price, an agent’s knowledge will probably help you sell your home fast. If that’s a priority for you, FSBO might not be the best choice.

Pros and Cons of Hiring a Real Estate Agent

You know the advantages and disadvantage of FSBO, but what about the alternative? Here’s what you need to know.

Pro: Less Time-Consuming from Start to Finish

When you hire an agent, they take the process off your hands. Most will handle all the marketing, scheduling, and showing for you so all you need to do is have the house ready for showings.

Pro: Lower Chance of Contract Problems

Real estate sales are complex transactions, and they’re hard for the average person to navigate. A real estate agent can handle the intimidating paperwork so you don’t find yourself in a legal mess.

Con: Losing Out on Commission Fees

As helpful as a real estate agent is, their commission fees can be more than many sellers bargain for. A typical real estate commision is between 4% and 7% in most areas. For a $300,000 home that’s up to $21,000 out of your pocket, or more in some locations.

Con: Not All Agents Are Equal

The scariest thing for many homeowners who hire an agent is that their agent won’t live up to their fees. While a real estate agent can offer you plenty of financial and time-saving benefits, that’s only true if they know what they’re doing. It’s possible to shell out a commission fee without enjoying the full benefits you’re paying for.

Setting the Tone for Your Real Estate Sale

Deciding between for sale by owner vs realtor will affect every aspect of your home’s sale. The pros and cons above can help you make the right choice.

For more great tips for your financial life, check out our frugal living blog.

How to Make the Home Buying Process Nice and Easy as a Single Mom

home buying processAre you a single parent looking to purchase a home?

As a single mom, you may feel that you have enough on your plate. Buying a home may feel all daunting, especially when you are daily responsible for your child’s welfare.

Luckily, it is entirely possible to purchase your dream home even if you are doing so solo. Read on for insight into the home buying process for single parents!

1. Know Your Budget

It’s vital to identify your financial standing before you start browsing properties on the market. This means assessing income sources, assets, and current outstanding debt. These numbers will help you ultimately determine your maximum budget for purchasing a home.

If you currently own a home, it may be wise to initiate the selling process sooner rather than later. This can help you nail down your budget even more precisely.

Click here if you’re thinking, “I need to sell my house fast!”

Be realistic when identifying your budget, and be liberal (rather than conservative) when calculating your monthly financial obligations. It may also be wise to check in on your credit score’s health.

A higher credit score will boost your eligibility for securing a mortgage with good rates.

2. Know Your Mortgage Options

As a single mom, you may be heading straight for a conventional home loan. However, single parents are at a disadvantage in that they typically do not have a co-signer (i.e., a spouse or domestic partner).

For this reason, it may be harder to secure a conventional mortgage. Yet you do have options when it comes to mortgages.

FHA and USDA loans, for example, cater to individuals of a certain income bracket within more rural areas of the U.S. VA loans may also be an option if you or your family have served in the military.

You may also wish to consult a lender to learn more about your financing options as a single parent.

3. Ask Friends for Lender Referrals

There’s nothing worse than navigating the home buying process alone. Reach out to family members and friends to ask for lender referrals.

Because there are so many lenders out there, referrals can save you both time and money. After all, your friends have already done the work of finding and selecting a reputable lender if they are current homeowners!

Browse consumer reviews online to learn more about what it will be like to borrow from specific lenders. Prioritize the ones that are reputable, certainly, but also don’t neglect locally-based lenders.

4. Meet With All Prospective Lenders

Once you have your list of prospective lenders, be sure to meet with each one in person (or over the phone). When meeting with lenders, clearly state your needs as a single parent.

Ask the lender for advice about which mortgage may be right for you, and be sure to pre-qualify for mortgages with lenders you like.

Pre-qualification will make the home buying process easier and faster. It will also help you compare rates from different lenders.

5. Work With an Agent You Like

Start browsing properties only once you’ve been pre-qualified for a mortgage. When doing so, work with an agent with a positive local reputation.

The best real estate agents will be attentive to your specific needs and supportive at every step of the home buying process.

Final Thoughts: The Home Buying Process

The home buying process can be intimidating, especially if you are navigating it alone! Luckily, even as a single mom, it is possible to purchase a home without too many headaches.

Be sure to identify your budget and mortgage type ahead of time. Ask your friends for lender referrals and be sure to compare offers from multiple lenders.

Get pre-qualified for a home loan before you start looking at properties, and be sure to work with a real estate agent you trust!

At Thrifty Momma Ramblings, we know that life can be challenging as a single mom. Find more personal finance tips here!

1031 Exchange Rules: How You Can Save Money When Selling a Property

1031 exchange rulesIt’s really nice to make a massive profit when you sell real estate.

But it’s not so nice when you have to fork over a huge chunk of those profits over to the IRS come tax time.

That’s the reality of selling real estate, particularly as it applies to investment properties. More specifically, capital gains taxes usually have to be paid on any gains – or profits – of a real estate deal. If you sell an investment property for a profit, odds are you’ll have to pay capital gains taxes on it.

Or do you?

Luckily for real estate investors, there’s this little thing called a “1031 exchange” that allows investors to avoid having to pay capital gains taxes when they sell their properties.

But it’s not so cut and dry. There are certain requirements that investors have to meet in order to take advantage of such a tax perk.

Let’s dive into 1031 exchange rules to see what they’re all about and how they can help you save tens of thousands of dollars when it comes time to sell any one of your investment properties.

What Are 1031 Exchange Rules?

Section 1031 of the IRS tax code allows investors to defer paying any capital gains taxes on the proceeds of the sale of real estate if the profits are put towards the purchase of a “like-kind” property.

Basically, like-kind means similar and can include just about any other type of real estate. That means you could realistically exchange an office building for a single family home.

But you wouldn’t be able to use the proceeds of the sale of real estate to be put towards buying a car. They’re not “like-kind.”

As long as the purchase of another investment property is done within a certain period of time, a 1031 exchange can be put into effect.

What Qualifies as a 1031 Exchange?

In order for you to be able to take advantage of a 1031 exchange, the property being sold must be an investment property. The transaction is not meant for homeowners who are buying and selling their primary residences. Both properties must be investments.

That said, homeowners who are selling their primary residences may also be subject to capital gains taxes if they don’t meet certain criteria. They can avoid paying up to $250,000 for single owners or $500,000 for married owners who have filed their taxes jointly. Still, 1031 exchanges are not meant for primary residences and are only meant for investment properties.

Further, the property that is being purchased needs to be worth more than the one that’s being sold. If you end up paying less for the new property, you’ll be paying taxes on the difference.

Types of 1031 Exchanges

There are three different ways that a 1031 exchange can take place:

  • Simultaneous exchange – This happens when a property is immediately exchanged for another.
  • Deferred exchange – This involves selling a property first then buying another property in its place after a certain amount of time using an exchange facilitator.
  • Reverse exchange – This occurs when the replacement property is bought first. with the help of an exchange titleholder. Then the current property is sold afterward.

It’s always important to use a qualified 1031 exchange facilitator for deferred or reverse 1031 exchanges. That’s because you’re not allowed to take possession of the proceeds of the sale before the exchange is complete.

There are even rules governing who can be an intermediary. For starters, you can’t use the same one that you used in the previous two years. You also can’t act as your own exchange facilitator.

Time is Ticking When it Comes to Finding a Replacement Property

In order to take advantage of 1031 exchanges, you can’t just take your time finding another property to purchase in its place. Instead, there is a certain amount of time that you have to find a like-kind property.

More specifically, you’ve got 45 days to identify a new property that you want to purchase. When you do, you’ll then have 180 days to complete the purchase.

A Maximum of Three 1031 Properties Can Be Identified

It’s pretty common for real estate investors to choose more than one piece of real estate that they have their eyes on. That’s because real estate deals typically take a long time to close, and any delays can creep up that would make them go past the 180-day mark.

By choosing more than one property, it’s more likely that at least one of the deals will go through. But only a maximum of three potential properties can be identified, as long as you close on one of them.

Further, any number of replacement properties can be identified as long as their combined market value doesn’t exceed 200% of the property being sold. For example, if you sell a property for $300,000, the combined market value of your next purchase can’t be more than $600,000.

How Are 1031 Exchanges Reported Come Tax Time?

You will have to pay the tax on the original profits of the sale of the property plus any additional gains since the purchase of the new property. A 1031 exchange is reported on IRS Form 8824 and submitted with your tax return for the year that the exchange took place.

Make sure you consult with a tax expert to ensure that all the rules are followed so the exchange doesn’t fall through.

For more information on 1031 exchanges, read more here.

Final Thoughts

1031 exchange rules are definitely complicated. That’s why it’s important to speak with an experienced tax associate to help you navigate all the ins and outs of 1031 exchanges.

These are handy tools that can help you save a ton of money. But you need to follow the rules closely in order to avoid getting dinged by the IRS.

Looking for more ways to save money? Be sure to visit our blog today!

Mom’s Money Guide: How to Begin Investing for Your Kids Futures

investing for kidsThe total cost for a 4-year degree will be more than $205,000 by the year 2030. That will be the year that kids born in 2012 turn 18 years old. If your kids are born later, expect a higher price tag.

The best investment for a child is one that starts as early as possible. Investing for kids now is how to build a fortune for your child’s future education.

Read on to learn all about the best investments for children and how you can get started.

529 Plans to Invest for Kids

All US states offer a 529 savings account. You can even enroll in 529 plans from other states. Make sure you look into the lifetime contribution limits on your plan, so you know how much you can put away.

Every year you are able to deposit funds up to the set annual limit without being dinged with a gift tax. For 2018, that limit is $14,000 for each child. However, if you and your spouse file a joint tax return, you can double that number per child.

If you have the money, you might want to make a large lump deposit now that is equal to 5 years’ worth of contributions. In other words, you could add $70,000 to your child’s 529 plan today if you wanted.

This is a good option if you have the cash and want your money to start growing as soon as possible. But that means that you won’t be able to add any other money until 5 years from now.

One of the best features of this type of investing for kids is that withdrawn money is not taxable if it is used for education. You can use the balance of your fund for any type of tuition including private school from kindergarten to grade 12. Check out these 5 tax refund tips to get the most out of your money.

The majority of 529 savings plans allow you to invest your contributions through mutual funds. You’ll be able to choose what you want to invest in this way. Yet, if you want to invest in other things besides mutual funds, you can do that as well with a 529 plan.

How to Open A 529 Savings Plan

The first (and hardest) part of getting a 529 plan is choosing one. There are over 100 plans available. This is the simplest way to stop delaying and get your plan up and running.

Choose between a savings or prepaid plan or get both.

Savings plans are similar to 401K plans. There is investing in stocks, bonds, as well as other securities.

Prepaid 529 plans are like pension plans. they grow at a guaranteed rate and are often limited to people who reside in that state.

You might decide to get both kinds of plans and divide your contributions between the 2 accounts.

Next, pick either the in-state or out-of-state plan. Often, it’s wiser to get the in-state savings plan if you have a state tax benefit. Use this state tax calculator to see how much your tax benefit is worth.

Finally, compare costs and investment options for the plan you are considering.

Don’t be overly concerned with past performance of a plan. Look for a plan with low costs. Websites like collegesavings.org can help you compare plans.

Don’t get hung up on trying to find the absolute best investment plan for your 529 savings plan. The most important thing is to open a plan and start saving right away. You can always switch to a different plan later on if you want to.

Now, let’s check out other investment plans for kids.

Retirement Accounts

It may feel strange to think about your child’s retirement when you’ve got a baby or toddler at home. Yet, the sooner you start saving for retirement, the better.

Besides, retirement accounts can be used to pay for college as well as other big life expenses. And no, you won’t have to pay taxes on your withdrawals as long as you take out your contributions and not earnings.

Let’s pretend that you have invested $2000 every year for the past 3 years. You can go ahead and take out $6000 without any penalties and without having to pay taxes.

As soon as your child begins working, he or she should have an individual retirement account. Let’s look at custodial individual retirement accounts, next.

Custodial Individual Retirement Account

Custodial IRA can be created in your child’s name. The funds in the account belong to the child but as the parent, you control the assets until the child is an adult.

The age when a child gains access to the account is either 18 or 21 depending on which state you live in. These accounts are often managed at a bank or brokerage.

There are 2 main custodial accounts that prominently used for saving for post-secondary education. They are the Uniform Gift to Minors Act (UGMA) and the Uniform Transfers to Minors Act (UTMA).

Both of these accounts are irrevocable. Don’t deposit any money into either of these that you might need in case of an emergency.

You won’t be able to get it back. Instead, check out stock loan rates to learn about how to get access to funds when you need them.

Both of these do not have contribution limits. They are subject to Kiddie tax as the child includes this account as income on his or her tax returns each year.

UGMAs include securities such as stocks and bonds. On the other hand, UTMAs may include physical property like real estate and fine art.

Grandparents and others can add money to these accounts as gifts. Keep in mind that the most one person can gift a child per year is $14,000.

Note that when the child is not a minor, he or she does not have to use the funds in these custodial accounts for education.

Certificate of Deposit Ladder (CD)

Now that we’ve looked at 2 types of investments that are subject to market fluctuations, let’s examine an investment plan that has less risk.

A CD ladder means buying several certificates of deposit, all with varying maturity dates and interest rates. When one CD matures, you divert that money into a new CD. You keep doing this until you want to use the money you’ve saved.

Since it’s easy to estimate your earnings, you are able to plan for the future with a good amount of certainty.

This option is great for people who want to play it safe or want to avoid having all their eggs in one basket. You won’t earn huge returns with this method, yet it is a long-term savings plan that works.

How to Open a Certificate of Deposit

Opening a CD is similar to opening a bank account. First, you need to choose an insured financial institution. That way, if the bank or credit union fails, their insurance protects you up to the maximum that is legally allowed.

Then, you choose a type of CD. There are many kinds to choose from.

After that, select your term length. The longer the term, the higher the interest rate you’ll earn. It’s in your best interest to select CDs that mature well in the future.

You will also need to choose how you want to collect your interest payments. You can get it monthly or once a year.

It’s best if you don’t rely on this payment as part of your income. Make sure you build a personal monthly budget that works for you.

The wise thing to do is to reinvest the interest into the CD to earn even more interest. Once the CD reaches the end of the term, you’ll get the amount you deposited plus the interest your CD accumulated.

You will need your SSN and other forms of identification to open up a CD (same as you would need when applying for a bank account or credit card).

Also, choose how you want to deposit money into the CD account. You can choose to mail a check or transfer the funds online or by phone.

Teach Children Financial Literacy

One of the best ways you can invest in your child’s future is to teach them how to manage their money wisely.

With the majority of Americans in debt, teaching kids about smart spending and being financially savvy is vital for the future of the country.

There are lots of great resources to help you teach your kids financial literacy including lots of resources about money on MyMoney.Gov

Instead of giving kids what they want, give them an allowance and help them learn how to save up for what they want. Or help them start earning money by doing chores, dog sitting, raking yards and babysitting.

Even though as a parent you want to give your kids every advantage, it is important for them to learn how to take responsibility for their financial freedom in their youth for a bright future.

Final thoughts on Investing for Kids

Thanks for reading! We hope you found this article on investing for kids’ future helpful. Remember, the sooner you get started, the better.

Now, take a look at these 3 expert money saver tips you need in your life.