Custodial Account Advice

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
NoviceNelly
Posts: 19
Joined: Sat Jan 30, 2021 11:20 am

Custodial Account Advice

Post by NoviceNelly »

I've recently moved this fund for a relative of mine from Primerica.
SHRAX
CLEARBRIDGE AGGRESSIVE GROWTH CL A

The expense ratio is greater than 1%. I would like advice on moving it to a VG fund with a lower expense ratio and a fund with a decent performance. This minor child is also very likely to apply for and receive financial aide when apply for college in 2 years. When I set this up initially I was not aware that creating a Custodial Account could have adverse affects on financial aide. I was told that I could cash out the $ and distribute to the child and avoid the adversity. Your thoughts on which fund to move the money to and go a better route so as to avoid any penalties to their financial aide packet.
Chris K Jones
Posts: 441
Joined: Sat Jan 20, 2018 5:54 pm

Re: Custodial Account Advice

Post by Chris K Jones »

I had/have custodial accounts (UTMA) at Vanguard for kids. They were all invested 100% in Total Stock Market. Financially, it worked out very well. You might want to move this to a 529 account though. As I understand it, only a small portion of it will count against financial aid for the kid. As an UTMA, 100% of the assets are counted against financial aid. One other thing to consider is that at 21 (in most states), an UTMA account gets turned over to the kid and they can do WHATEVER they want with it. Some kids have mental health or drug or alcohol issues. As I understand it, they are less likely to squander 529 funds. You should confirm this with someone else. That is my understanding though. Best wishes.
dbr
Posts: 46181
Joined: Sun Mar 04, 2007 8:50 am

Re: Custodial Account Advice

Post by dbr »

I think Vanguard total stock VTSAX/VTI would be suitable.

There is no such fund property as "good performance." All funds offer a chance of returns and a chance one will or won't get that return. The performance of VTSAX will be that of the total United States stock market and cost will be an expense ratio of 0.03% compared to 1.13%.
Post Reply