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Recession Proof Your Kids With Your Stimulus CheckBy Brad DugdaleFor people who qualify and filed income taxes electronically, your stimulus check has probably hit your bank account by now. If you filed a paper return then expect yours later this summer. But before you go out and spend that money (which is exactly what the government is hoping you will do) consider how this "extra" money could help your kids for years to come. Your kids have something you don't: more time. Time is the factor that can have a huge impact on the accumulation of wealth and also the one that we have little control over. If your family is getting the standard stimulus package then each adult will get $600 and each child will get $300. For a family of four that would be a total of $1,800. That's a pretty good chunk of change and certainly enough for you to stimulate the economy with a little family vacation, a big screen TV, some new electronics or appliances - the list is endless - and then the money is gone. But what if you could turn the $300 for a child into several thousand dollars? Let's assume you have a five-year-old. Let's also assume that you're going to take that $300, invest if for the future and basically forget about it for the next 60 years until your child is age 65. I know, it's a leap to think that far ahead but bear with me. If that investment returned an average of 9% annually over that period then today's $300 turns into $52,800. Got a two-year-old? Her $300 could become $74,400. That's an extra $21,600 simply because it has an extra 3 years to grow. What if you added your $600 to your child's $300 and invested $900. For a five-year-old it would now grow to $158,500 and for the two-year-old it would become $223,200. Now imagine if you added a little extra money to these accounts over time. You could literally "recession-proof" your child's future with minimal deposits today. It's easy to get caught up in our day-to-day activities and neglect planning for the future. Taking just a few minutes to do some planning for yourself and your children, however, can pay huge dividends in the future. We all know how fast time flies - don't let more of it get away because it could cost your kids a small fortune. Footnote on investing the stimulus check: You may be saying "This all sounds great but how do I start and how do I earn 9%?" The first place to start would be your financial advisor if you have one. If you don't, then you might consider a low cost "index fund" that tracks a major index such as the S & P 500. This index has historically returned an average of around 10% since its inception. Stick with well established mutual funds or index funds from a name you recognize and trust and never be afraid to ask questions. Brad Dugdale is a financial consultant and author of the gift book, "Munny Journey: A Keepsake Journal for Baby's First Money" which illustrates the power of compound interest starting at birth. More information and his book can be found at: http://www.munnyjourney.com
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