At the tender age of 10, my daughter’s financial future is secure.
Because I’ve done what I set out to do.
It took me 10 months, thanks to one obstacle after another, but it’s done.
Parker is now the owner of an invested Roth IRA. She punched in her first investment Thursday after school.
It was the beginning of her guaranteed road to multi-millionaire status.
By starting with a $4,000 lump sum contribution, Parker’s account could be worth $3.17 million by the time she’s 60.
Fifty years might sound forever away to some and probably does to Parker more than anyone. But we plan on sticking around. We might as well build.
By putting Parker’s earnings from Money Talks into her Roth IRA, we’re jump-starting her path to wealth. It’s why I can’t stop punching in scenarios on Roth IRA calculators.
One projection showed Parker’s account will cross the million-dollar mark at 45. At 54, her Roth IRA will be $5,000 shy of $2 million. At 60, she’ll cross the $3 million threshold.
And that’s just her Roth account, with only a conservative 7% annual rate of return.
Parker’s net worth will be substantially higher when accounting for additional assets — including companies you own and operate, Parker! — she’ll amass through the years.
Her UTMA (Uniform Transfers to Minors Act) account, launched last April, has been running smoothly for the past year. She’s up 14.43% on that account and, with a $70.39 dividend payout received for this quarter, has now collected $411.77 in dividends from her position in the Vanguard High Dividend Yield Index Fund ETF, ticker symbol VYM.
I’ve decided to dedicate 100% of Parker’s Roth IRA money to the Vanguard Total World Stock Index Fund ETF, ticker symbol VT. The fund is made up of about 60% domestic stocks and roughly 40% emerging markets.
I chose this index fund for its broad balance, low expense ratio and international exposure given that much can change in the global economy over Parker’s investing horizon. I’ll always bet on America. But I’m hedging my bet by also betting on the best and brightest companies from around the world.
A tax professional told me last December the IRS might not look favorably on the proceeds from Money Talks being split 50-50 with Parker since she isn’t responsible for 50% of the workload. The information initially made me think it wouldn’t be possible to max out Parker’s Roth IRA.
But then I learned I can contribute gifts.
As long as Parker maintains income as a partner at Money Talks (or any other job she works), I can match up to the contribution limit. So if she made $4,000 for her role at Money Talks in 2023, I can give her $2,500 as a gift to max out her contribution.
But before I could begin to taste financial freedom for Parker, I needed to overcome seemingly every hurdle imaginable.
First, I hit a snag with Parker’s social security card. Because I don’t have a physical copy, associates at one Bank of America branch last October prohibited me from opening an account dedicated to Parker, with me as a joint owner.
I tried and failed with Chase. I thought I cracked the code with Alliant Credit Union in early February only to be told, after three weeks of waiting and submitting multiple applications, that Parker apparently already has an Alliant account. Then I went to Capital One…Success!
I opened a Capital One Money teen checking account on March 4. The company markets the account as one for teens but acknowledges younger children are welcome too.
I linked Parker’s new checking account to her brokerage on March 5.
One week later, I made Parker the first person paid from Money Talks!
All payments we’ve received since partnering with cleveland.com and The Plain Dealer last May had been sitting in our business checking account. I hadn’t moved a penny. I simply watched the account swell. It’s accrued only $72.41 on less than a 2% interest rate, so it clearly wasn’t parked there for maximum growth.
As a budding solopreneur, I was too terrified to touch it. If you think you’re a stickler, Parker, wait until you get a load of our annoying Uncle Sam.
It was important to me to do everything I could properly with the paperwork. That meant securing Parker a checking account she owns so I could make transfers from our business checking directly to her before funneling from there to her Roth.
On March 12, I made Parker’s first $2,500 transfer from our business checking account to her checking account. I planned to inform her as a surprise after school last Thursday, only to hit another snag.
Parker caught strep throat. Our weekend was delayed.
The following Tuesday, I moved another $1,550 from our business account to Parker’s, intentionally to leave $50 in her checking.
Then came the long-awaited Thursday, when school dismissal arrived at 2:50 p.m. and Parker hopped in the car.
As she learned about her Roth on the ride home, I sat in the front seat beaming the whole way. Shining brighter than a diamond. One proud papa.
Finally, I’ve paid Parker what I owe her.
With this investment, Parker took another step toward an abundant life.
This will help her to never worry about money. It puts her on a path to never having to live paycheck to paycheck. It provides security that will allow her to never work a job she doesn’t find fulfilling.
My only concern is that we’re jumping in while the market is at all-time highs. Parker’s fund, ticker symbol VT, hit its 52-week high this week, topping $110 per share.
But the kid’s got a 90-year time horizon. She’ll be fine.
The first few years could be choppy as market corrections arrive. Dips will turn her account red more than we’d care for. But we’re building our tolerance, and we’ll never stop buying.
You changed the trajectory of our family when you pressed that order button Thursday, Parker. In doing so, you gave me peace knowing I’ve done everything to fulfill my highest duty as your father.
For this is the legacy I’m leaving you.
Darnell Mayberry is a sportswriter based in Chicago and is the author of “100 Things Thunder Fans Should Know & Do Before They Die.” He loves his daughter Parker, money and the Minnesota Vikings. You will find his column, Money Talks, each Saturday on cleveland.com and Sundays in The Plain Dealer.