Smart Reasons to Save, Use and Invest Money

Creating My Kid’s Christmas Money Fund

Old Wallet
Old Wallet

This year, I paid for my kid’s christmas money (I give them each $100), out of my pocket. Zapped, right out of my old wallet.  Next year, I’m going to start a “ Kid’s Christmas Money Fund”!

So what is a Kid’s Christmas Money Fund?

The fund will be money I put into a 4 to 6% dividend yielding stock that is relativly low risk (I hope).  Maybe an energy stock (or energy transfer stock) or something that has a similar risk level (maybe McDonalds?).

My goal is for the fund to pay out $100 to each kid until there are 16, then I’ll double the amount to $200.

So how am I going to start out this fund?

Starting in January, I’m going to seed the fund with $1,000 from savings.  Then each month, I’ll start to save $200.  Every time my saved amount equals $1000, I’ll buy more shares of stock.  So my total deposits  per year will end up being $2,400. 

Once the kids are in college, perhaps I’ll give some of the extra money from the fund to them for spending.  The Green bar below in the chart represents when I’ll start giving the dividend to them.  So each would get half of $687 (around $340 piece).  I’m not 100% sure if this is what I want now or not.  I’m experimenting with ideas still.

 

The Kid’s Christmas Money Fund

AdditionalScheduledAccumulatedInterestDividend
YearMoneyDeposits/YrAmountRateYield
20100100010000.04$40
201102400$3,440.000.04$138
201202400$5,977.600.04$239
201302400$8,616.700.04$345
201402400$11,361.370.04$454
201502400$14,215.830.04$569
201602400$17,184.460.04$687
201702400$19,584.460.04$783
201802400$21,984.460.04$879
201902400$24,384.460.04$975
202002400$26,784.460.04$1,071
202102400$29,184.460.04$1,167
202202400$31,584.460.04$1,263
202302400$33,984.460.04$1,359
202402400$36,384.460.04$1,455
202502400$38,784.460.04$1,551

It’s a little fund, but a fairly easily obtainable.

I wonder if it’s worth the trouble…

4 Responses to Creating My Kid’s Christmas Money Fund

  1. Every since my early 20s I’v always thought it would be awesome to have dividend yielding funds for expenses.

    I’ve already started a Lunch fund (and it’s coming along quite nicely :)).

    How I do it, is I pick a stock or two and designate them just for that particular fund. When I add more money for the fund, it’ll go just into those particular stock.

  2. I remember your lunch fund idea. Okay, here are two concerns I have. What safe and solid that you can expect to be around for the long haul will pay you a 4$ interest rate? Second, if you are making monthly contributions to the fund then how will you insure that transaction fees don’t eat up a huge portion of your contributions?

  3. Ahhh, good questions!

    For the stocks, I’m looking at REITs and Enervy stocks. The are risky, but I’m investing money that I would have wasted on buying lunch anyway. I fully expect the lunch experiment to be a very bumpy rollercoaster of a ride! 😀

    As for the Transaction fees, I only buy the stock once a year, after I get about $1,000 saved up. Another great alternative to stocks would be mutal funds, but I like dabbling in stocks…