I have been wanting to write this step by step for a while now but just havent gotten around to it until now. The sole purpose of this blog is to guide you on how to open a custodial brokerage account for your kids using the M1 Finance platform. I myself use M1 Finance and have opened a custodial for each one of my kids and boy am i glad i did. When they turn of legal age (different depending on the state) of 18 here in Washington, they will get access to the funds. Once that happens they can use the money for what ever they want. Hopefully they will be smart with it...you can guide them into investing it in real estate or keeping it invested and growing. The goal here is to support our kids in what they want to pursue for their future and this fund can help them do that.
Okay, lets get started. Opening a custodial account on M1 Finance is a straightforward process that allows you to invest on behalf of a minor, helping to secure their financial future. If you care about your kids future you will want to follow these steps to set up the account. One more note to make here is that i am not being paid to promote M1 finance to my 2 readers, i chose m1 finance because that is the platform i use and i have been quite happy with it. Okay, here we go:
1. Create an M1 Finance Account:
- Visit the [M1 Finance website](https://m1.com/) and click on the "Get Started" button.
- Enter your email address and create a password to establish your login credentials.
2. Complete the Initial Setup:
- Provide the required personal information, including your name, address, and Social Security number, to verify your identity.
- Link your bank account to facilitate funding of your M1 Finance account.
3. Subscribe to M1 Plus (if not already a member):
- M1 custodial accounts are available exclusively to M1 Plus members.
- Subscribe to M1 Plus, which is available for $125 per year. (This is a new fee but well worth it) Pluss once you have the account you can cancel the Plus version of M1
4. Add a Custodial Account:
- After logging in, click on the "Add Account" option, typically found in the upper-right corner of the dashboard.
- Select "Custodial Account" from the list of available account types.
5. Provide Beneficiary Information:
- Enter the minor's details, including their full name, date of birth, and Social Security number.
- Confirm the minor's state of residence, as this determines whether the account will be designated as a UTMA or UGMA account.
6. Review and Agree to Terms:
- Carefully read through the account terms and conditions.
- Acknowledge that all contributions to the custodial account are irrevocable gifts to the minor and must be used for their benefit.
7. Fund the Custodial Account:
- Transfer funds from your linked bank account to the custodial account.
- Note that there is no maximum contribution limit; however, be mindful of potential tax implications for large contributions.
8. Set Up Investment Preferences:
- Utilize M1 Finance's "Pie" investing system to create a diversified portfolio tailored to the minor's future financial needs.
- Choose from individual stocks, ETFs, or M1's expert pies to build the investment strategy.
9. Monitor and Manage the Account:
- As the custodian, you have full control over the account until the minor reaches the age of majority, which varies by state (typically between 18 and 25 years old).
- Regularly review the account's performance and make adjustments to the investment strategy as needed.
See that wasnt that hard was it? By following these steps, you can establish a custodial account on M1 Finance, providing a valuable financial resource for the minor's future. But don go relaxing just yet.
You opened an account now what?
This is what we are doing, you are free to do as you wish. We deposit $100 into each of our kids account every month. We dollar cost average so we dont have to worry if the market is down or up. Figure something that works for you and go with that, but make sure you are putting something in every month. The sooner you start the better and the more money your kids will have in the future.
What an awesome way to set your kids up for success. Definitely going to look into this for our little humans as well.