With new child savings incentives on the horizon, it seemed timely to review our favorite accounts available for helping the next generation build long-term, generational wealth.

There are many details we can share — please use this as an introduction and know we are here to help you decide what is best for your family.

Two keys to success are (1) the type of account and (2) the investments within it.

(1) Our Favorite Account Options for Young Investors

Roth IRA (Individual Retirement Account)

This is beneficial for everyone, not just kids. We view the Roth IRA as the best investment account for the next generation.

• Contributions are made with after-tax funds, but withdrawals in retirement are tax-free.
• For minors, taxable income is often wiped out by the standard deduction ($14,600 in 2025), meaning contributions can be “double tax-free” — no tax going in, and no tax coming out.
• Funds can also be used for certain expenses before retirement (education, first-time home purchase, emergencies).

Example: Luca earns $10,000 waiting tables, helping a family friend’s business, and mowing lawns. Because of the standard deduction, he owes no income tax. He contributes $7,000 (the 2025 max) into a Roth IRA — because of the deduction, he didn’t pay taxes on the principal, and he won’t pay taxes on the growth.

One limitation is that contributions cannot exceed earnings for the year. Families can help by ensuring kids earn income (through work for the family business, babysitting, or other jobs) that allows them to make contributions. Ensuring your next generation earns enough to max out a Roth, or even just contribute some, will have profound impacts due to compound interest.

A single $7,000 contribution at 17 years old, compounding at 10% annually, would grow to over $1 million by age 70. Our goal is for there to be more contributions and even better returns — which would make that number much higher.

These decisions create not only retirement security, but also a foundation of generational wealth that can be passed down.

Uniform Transfers to Minors Act (UTMA) or a “Gift to Minors Account.”

A UTMA is a straightforward way to transfer wealth to children.

• Managed by a parent/custodian until adulthood (18–21 in most states, sometimes 25).
• There are no annual contribution limits, unlike a Roth IRA. And anyone can gift funds.
• Some tax advantages, though larger accounts may be subject to the “kiddie tax.”
• Works well as a feeder account to help children fund the Roth IRA contributions once they begin working.

Example: Luca’s parents contribute $100 per month starting at birth. At a 10% annual return (and ideally we do better), the account would grow to about $85,000 by age 21, before taxes. Not a bad start. Luca and his parents could also shift money from that UTMA account into his Roth once he starts working.

We believe strongly in helping the next generation get started. That is why we will not charge advisory fees on accounts for minors. UTMA accounts, in particular, are a great way to start building wealth early without added costs.

(2) The Investments Within the Account

One reason we are currently focusing on these two accounts is because what goes inside the account, the investments, is even more critical. These accounts allow full flexibility, especially compared to other accounts for children, such as 529 plans.

Limited investment options can limit returns over time.

Our four-factor model — Quality, Safety, Growth, and especially Value — continues to guide us and the investments we make in these accounts. Over the last 27.5 years, our model portfolio has compounded 51% more than the S&P 500. By focusing on long-term bargains rather than chasing trends, our goal is to give the next generation the best chance to see their wealth multiply. 

Simple Checklist to Start the Road to Generational Wealth

• Invest early and often — even just a little bit each month adds up significantly for your kids.
• Take advantage of tax benefits (such as Roth IRAs). Child, young adult, or adult — maxing out your Roth is rarely a bad idea.
• Stay disciplined with investments — quality and value matter.
• Talk to us — we are here to guide your family every step of the way.