What Is A Custodial Account And Why Should You Get One?

Are you trying to save money for your child’s future? Why not open up a custodial account? It is a special type of brokerage account that is meant for kids.

By opening up the best custodial brokerage account, you can secure your child’s future. To know more about a custodial account, you should give this article a read.

What Is A Custodial Account?

To define it in simple words, a custodian account is a brokerage account that is managed by a custodian i.e. parents, grandparents, and others. This can be an investment or a savings account held at a bank, financial institution, or brokerage firm.

A custodian account is usually managed by an adult on behalf of their child. However, the funds transferred to the account belong to the child. You can withdraw the cash from the account, but you will have to use it on something that will benefit your kid. These accounts are great for parents as they can save for their kid’s future education and other important things.

Why Should Open A Custodial Account?

Opening up a custodial account for your kid can be beneficial for them in the long-run. Here are some main benefits that you can get from a custodial account.

  1. Helps You To Save Money For Your Child’s Future

By opening a custodial account, you can easily save for your child’s future. A custodial account is different from a regular savings account. The funds transferred to a custodial account are no longer yours. The asset belongs to your child. Once they reach the required age, they can use the money for their benefit.

  1. They Are Widely Available

Another good thing about custodial accounts is that they are widely available at banks and other financial institutions. These accounts can be opened by an adult on behalf of a minor. All you need is some personal information of your child including name, address, age, etc., to open a custodial account.

  1. No One Can Take Away The Funds

As a custodian, you can withdraw cash from the account, but you cannot use it for your benefit. In other words, the money can be spent on things that will benefit your child.

Opening up a custodial account can be a great way of saving money for your kids. You can open only one account for your kid. It is easy to open and manage.

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