November 8 - Gifts or Transfers to Minors

           Unfortunately for me, being under eighteen years old means that I cannot possess my own Vanguard mutual fund.  I want to start investing now though, so my father and I looking for ways to get me a fund even though I'm two years too young.  Right now, my father proposed that we can use one of his small, current funds ($361) and he will just transfer it completely over to me on my eighteenth birthday.  Most students in this class most likely don't have a parent with an account they're willing to hand over, so I researched other ways to start investing now.  I was planning on calling a Vanguard rep with my father to ask them how I could receive my fund when I'm older.  However, my dad just got back from a business trip and was too tired to call up a rep tonight.  I found an uncomplicated Vanguard method however (http://www.vanguard.com/pdf/bgtm.pdf).  Uniform Gifts to Minor Acts (UGMA) and Uniform Transfers to Minor Acts (UTMA) are two methods.  These accounts provide a simple way to give gifts or transfer assets to a minor without the complications of a formal trust.  According to my dad (a lawyer), a real trust fund requires an attorney.  For UGMA accounts, an account is created by an adult on behalf of the minor.  These accounts are controlled by the adult until the minor comes of age.  This could be a good option for students in our class wishing to invest before they become "adults."
        Today in class we learned about classes of equity mutual funds.  Mr. Hallam showed us a large variety of different mutual funds we can use.  Lets go through them.  One type is a large cap mutual fund.  This fund includes only big businesses (from the S&P 500) and only invests in those.  Mid cap funds are similar except in that they invest only in mid-sized businesses.  Small cap funds are the same thing except that they invest in small companies that haven't hit it big yet. A value fund is interesting in that it ONLY invests in cheap stocks, so you won't have to pay much to buy them.  A growth fund invests in companies with fast growing profits.  Remember that you can also buy mid-cap, small-cap, value and growth indexes.  If you were to buy a total stock market index (what Mr. Hallam invests in), you are investing in over 6,000 stocks. One very important thing to remember is that a balanced actively managed index has within it both actively managed stocks and actively managed bonds.
         This article http://andrewhallam.com/1901/01/calling-fee-based-financial-advisors/ on Andrewhallam.com interested me.  Mr. Hallam is trying to recognize the rare financial advisor who are true fiduciaries (def: a trustee).  These advisors can be super helpful because not only will they not act in order to increase their income, they instead only charge a 1% annual fee.  Mr. Hallam's upcoming page: Financial Advisors With a Conscience will be very helpful for all his subscribers who may need a bit of help investing.  This is a great idea by Mr. Hallam to recognize these financial advisors.