THIS ACCOUNT(UGMA) | OTHER ACCOUNTS(i.e. Savings Accounts) |
Grows through investments (i.e. in stocks, bonds, ETFs), providing the potential for higher returns |
Grows with fixed interest rates, providing limited growth potential |
Re-invests money that you gain, allowing earnings to compound over time |  Adds interest that you gain to your balance |
Has lower tax rates for minors |
Subject to ordinary income tax rates |
How can I grow my child's investment through compounding?
Compounding is the process where your kid’s investment grows over time as returns are reinvested, allowing them to earn returns on both the original contributions and the accumulated growth. The more you contribute, the greater the potential for compounding to build your child’s financial future.
You can contribute in two ways:
One-time contributions: Make a single payment whenever you choose
Recurring contributions: Set up automatic payments on a schedule that works for you
The minimum contribution for either type is $20.00. A minimum contribution of $20 per child is required within the first 6 months to keep the account open.
Learn more about contribution options here.
Want to learn more? Check out these articles on other common questions:
Investments involve risk of loss. Fabric by Gerber Life and its affiliates do not provide tax and accounting advice. This material has been prepared for informational purposes only, and is not intended to provide tax and accounting advice. You should consult your own tax and accounting advisors before engaging in any transaction.