Million Dollar Children

Million Dollar Children
by Scott Wallace

I don't know any parent that doesn't want there children to have a better life than they did. Well did you know that as their parent you can ensure their financial future from a very young age? Here's my story about the million dollar children and how you can ensure your child becomes a millionaire.

Probably the simplest way for you to have million dollar children would be to have them acting from an early age. Hopefully they will be "discovered" and whisked off to Hollywood as the next child star. Could it happen...certainly. Odds are though it is not likely to happen. So then how does one create a million dollar child?

This is yet another simple yet effective way to ensure your child's financial future as a millionaire and leave a lasting legacy for yourself. Most parents give their children an allowance for performing task around the house. Often this is considered a reward for doing good deeds and showing their responsibility.

Now consider this for a moment. On an annual basis you give your child an allowance totaling $520 per year. Not really a large amount by any means. Now lets say instead of calling this an allowance you "hire" them, make them pay taxes (they will get it all back) and use this money to teach them about saving for retirement. Since they have employment income they are eligable to open a Roth IRA. Again, this is provided that you have established an employer/employee relationship by paying your child and not giving them the money as a gift or allowance.

Now lets say you started this with your child at the age of seven and put all earned money into the IRA and for analysis sake that your child earned $4000 per year. If that $4000 was invested at the average Roth return of 8% your future millioniare child would have approximately $69,000 dollars at the age of 18. Now if this money is left untouched by the time your child reaches the age of 60 this money would have compounded into almost $2.4 million dollars, all of which can be withdrawn tax free! Couple that with them earning any additional income through other employers between the age of 16 and 18 and it could be even more!

So once again the power of compound interest and small savings can easily make your children future millionaires without them saving any money after the age of 18. However, as with any savings plan I advise you to consult a professional investment company and/or a tax attorney to ensure you cover all the legalities of making million dollar children.