Want to Leave Each Grandkid $100,000 Without Hiring a Lawyer? These 3 ETFs and a Custodial Account Do It
Three ETFs and a custodial account you can open this afternoon might be all it takes to hand each grandchild a serious financial head start, but the trade-offs hiding inside this simple strategy are exactly what most grandparents overlook.
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You want to hand each grandchild a serious head start without the complicated legal setup. Skip the trust attorney. A custodial account under the Uniform Transfers to Minors Act (UTMA) can be opened in an afternoon at any major brokerage, and three low-cost ETFs can do the work for the next 15 to 20 years: the Vanguard S&P 500 ETF (NYSEARCA:VOO), the Schwab U.S. Large-Cap Growth ETF (NYSEARCA:SCHG), and the iShares Core MSCI Emerging Markets ETF (NYSEARCA:IEMG). Three tickers, one account per grandchild, and time on your side.
Why a Custodial Account Beats a Trust for This Job
A UTMA or UGMA account is a brokerage account you open in your name as custodian for a minor beneficiary. No lawyer, no filing fees, no ongoing trust accounting. You pick the investments, you fund it, and the money legally belongs to the child. The IRS lets you drop $19,000 per recipient into it in 2026 without touching your lifetime gift-tax exemption, and a married couple can double that. Fund it consistently for 15 or more years, and compounding does the rest.
VOO: The Core Engine That Costs Almost Nothing
VOO tracks the S&P 500, so a single share buys your grandkid a slice of roughly 500 of the largest U.S. companies. The expense ratio is 0.03%, which works out to about $3 a year on every $10,000 you invest. That’s about as close to free as a fund gets, and over a 20-year horizon those saved fees compound into real money.
The long-run numbers explain why this fund anchors so many custodial accounts. VOO returned 316.92% over the past 10 years and 81.34% over the past five. Past returns are not a promise, but the S&P 500 has been the workhorse of American wealth building for decades. Make VOO the largest slice, roughly 60% to 70% of each grandchild’s account, and you have covered the essential core of the portfolio.
SCHG: A Growth Tilt for the Long Time Horizon
A five-year-old has a decades-long runway. SCHG holds the growth half of the U.S. large-cap universe, which today means heavy exposure to the companies driving technological innovation. The fund manages $61.08 billion in net assets, with top positions in NVIDIA at about 11%, Apple near 9.8%, and Microsoft around 7.2%, followed by Amazon, Alphabet, Broadcom, Meta, and Tesla.
That tilt has paid off. SCHG returned 447.03% over 10 years and 83.73% over five. Sizing SCHG at 20% to 25% of the account adds growth exposure on top of the S&P 500 core without straying from blue-chip American names.
IEMG: The Diversifier That Fills the Global Gap
The U.S. is not the whole world. IEMG holds thousands of companies across China, India, Taiwan, Brazil, Saudi Arabia, South Korea, Mexico, and beyond, with roughly $162 billion in net assets and 2,700 positions. Top holdings include Alibaba, PDD Holdings, Saudi Aramco, and ICICI Bank. Emerging markets have lagged U.S. stocks for years, but IEMG has finally rallied, up 26.88% over the past year and 136.45% over the past decade. A 10% to 15% slice gives the account exposure to the demographics and growth that the S&P 500 simply does not capture.
Real Trade-Offs Before You Fund the Account
Custodial accounts are simple, but they come with three real caveats. First, the money legally becomes your grandchild’s at the age of majority, 18 or 21, depending on the state. If maturity is a question mark, a 529 plan keeps you in the driver’s seat. Second, IEMG will swing harder than VOO in bad years. Emerging markets are volatile, and a 20% drawdown is not unusual. Third, SCHG is concentrated in mega-cap tech, so when that group corrects, the fund corrects with it. None of those trade-offs disqualify the strategy — they just mean you fund monthly, ignore the headlines, and let two decades do the work. A custodial account handles the transfer to the grandkids, but the rest of the estate still needs the paperwork done right (beneficiary forms, titling, and a current will are covered in our free estate checklist here: Die With a Plan).
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Ryne Mauck is an investment writer covering exchange-traded funds, retirement planning, and portfolio strategy. Through his work at 24/7 Wall St. and other investment platforms, including Seeking Alpha, he aims to provide clear, research-driven insights that help investors make more informed decisions while maintaining a long-term approach to investing.
Ryne holds a B.Sc. in Finance and an M.A. in Political Science. He is a formerly registered Municipal Advisor Representative and has passed the Series 50, Series 63, and Series 65 exams. His articles are not intended to be, nor should they be interpreted as, financial advice.
