My daughter turned 1 a few weeks ago, there are a very short list of startups that I think might still exist looking a bit like they do today when she is an adult...
I cannot imagine making a 17 year bet on a startup. I like that you're all parents (+ an uncle, close enough) and actually adults rather than a crop of 20 year olds about to be acquihired, but what happens if you just stop for any reason?
Founder/CEO TrustEgg - The deposits are held at an established Trust Co. (Summit Trust Co. of Nevada)and if something were to happen to Summit or TrustEgg, the accounts would be transferred to another Trust Co. under the supervision of the State Department of Financial Institutions.
What happens if TrustEgg goes out of business, is my child’s account safe?
Definitely. If TrustEgg has to close its doors, or destroyed by an act of god, the underlying accounts would be transferred to another Trust Co, or the child’s parent/guardian would be named custodian. This would be done at the discretion of the State Division of Financial Institutions.
TrustEgg Founder/CEO - You can set-up your own UTMA, but you would need to be the custodian. If you have a third party custodian (what we offer) then the price increases. We also have no minimums, which keeps many people from starting an account. TrustEgg also brings in friends and family to make contributions.
TrustEgg makes everything easy. As for price, if you have an adivser based 529 plan, you will pay an extra 1% on top of the mangement fees, or a load of around 6%.
> You can set-up your own UTMA, but you would need to be the custodian.
Quoting wikipedia on the difference this makes.
> The donor can serve as a custodian, rather than transferring the property to someone else to hold for the minor. However, the value of custodianship property is included in a donor’s gross estate if the donor dies while serving as the custodian.
I looked into that, but since my kids have dual citizenship (US/Italy), and since I could easily envision them not going to school in the US, or deciding that university isn't for them, the penalty provisions of that seemed a bit onerous.
Most of the ones I found in Rome were along the lines of
"PONTIFICAL NORTH AMERICAN COLLEGE"
Which sounds like some sort of religious institution. Also, none of the major Italian universities in Rome are listed, to say nothing of the University of Padova here in Padova/Padua, which is one of the oldest universities in the world, and where Galileo spent "the happiest years of his life". Granted, these days it's not ranked that well worldwide, but hey, who knows where they'll end up, and getting 10% grabbed sounds like a bad deal.
The service is surprisingly decent for very simple trusts of their target market, but it costs 89 basis points (0.89%) for the assets under management, which is quite a lot for such simple trusts. Then again, given the modest sizes of the trusts that they will be managing, 0.89% is probably not much.
Over 17 years (example taken from elsewhere in the thread) that works out to 14.1% of the total amount assuming the total amount is paid out when the beneficiary of the trust reaches the age of majority.
Founder/CEO TrustEgg - For most families the only option they have, or are using right now, are savings accounts which over time will lose to inflation. We offer a way for accounts to receive a market rate of return.
As for pricing, an adviser based 529 plan is going to add an additional 1% to the management fee, or ~6% load on deposits.
Your comment is very misleading. Families can invest in any of the same investments you do, directly via Fidelity or Vanguard, and save an enormous amount in fees. You may add value by being a nicer UI/wrapper around these existing services, but at least be honest about that and what your customers are paying for.
It seems they are charging ~.5% on top of whatever Vanguard charges, whose own expenses are typically around .3%.
For the general case it probably makes more sense to just invest in Vanguard directly. The downside is that people would have to do their own research in regards to asset allocation. But imo that endeavor would be worth it seeing how these accounts will be around for potentially decades.
Apart from a nicer UI, and the somewhat orthogonal feature of keeping a journal to share with your kid later on, how much benefit does this really offer over just setting up a trust directly with Vanguard rather than indirectly through TrustEgg?
Vanguard supports contributions to accounts you don't own, so that still falls under "nicer UI".
Not that you can't make a service around wrapping a nicer UI on top of something that many people legitimately find complicated. I just wondered if TrustEgg offers any services that Vanguard doesn't offer at all, or if they just provide a user-friendly face on a complicated but working process.
money isn't everything. you don't need a trust fund to pay for an education. a 'good' parent spends time with their kids. that's all a kid really wants. i know plenty of friends making 6 digits and double income parents, so much money but no time for timmy. its so sad. conversely my hippy friend makes mostly nothing and spends every waking day with his kid.
I think your point is misdirected. It is virtuous to spend time with kids and save money as well. Your hippy friend may enjoy financial aid (not to mention social welfare) that the taxpaying middle class do not qualify for.