3 Reasons Why the UGMA is the Best Account for Your Child’s Future

Here are three reasons why the UGMA (Uniform Gifts to Minors Act) is the only account I would ever open for your child if your only goal was to make them a millionaire. I'm Tyler, a former financial advisor and portfolio manager, and I create financial content for free to help you understand your investment options.

1. Unlimited Contributions

Unlike custodial Roth IRAs and 529 plans, there are no limits on your contributions to a UGMA account. You could fund that account with $17,000 at your child's birth, avoid any federal gift tax, and invest it in low-cost index funds. Your child would most likely become a millionaire by age 43.

2. No Contribution Restrictions

There are no restrictions on contributions, meaning you don’t have to own a small business and hire your child as an employee, worrying about being audited for paying them for using their likeness and image in one of your social media campaigns.

3. Flexibility in Spending

Finally, there are no restrictions on how your child spends the money. If your child decides that a liberal arts degree isn't worth a quarter of a million dollars, they have the flexibility to go to VoTech, learn something practical, start their own business, or even purchase their first house in cash by age 21.

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