A Redditor turned to the Personal Finance subreddit for advice about what to do with his stepson’s survivor benefits. The child’s biological father passed away a few months ago, and the child will now receive $1,100 per month until he turns 18.

The couple wants to make sure they grow their son’s wealth with the survivorship benefits. The kid is currently 8 years old, so $1,100 per month spread over 10 years will come to $132,000. Some Redditors shared their thoughts in the comments, and I will share some thoughts as well. However, it’s good to speak with a financial advisor if you can.

Invest the Money into a Good Fund

You don’t have to get fancy when it comes to building your child’s wealth. Regularly investing the monthly payouts into a good ETF is all you really have to do. Since the kid is young, it makes sense to target growth ETFs like the Invesco QQQ Trust (NASDAQ:QQQ) or the Vanguard S&P 500 ETF (NYSEARCA:VOO).

These funds tend to grow in the long run as companies continue to grow and report solid earnings. While the stock market may go through corrections, there’s plenty of time for the positions to recover. Furthermore, since the couple can invest $1,100 per month for the child, they can buy dips and consistently accumulate more shares.

One of the commenters suggests storing these ETFs in an UTMA or an UGMA account. These custodial accounts give the parents full control until the child turns 18. Then, the ETFs get transferred to the child.

Set Up a 529 Brokerage Account

A 529 brokerage account is another viable option for saving up for your child. The contributions you make to this account count as tax deductions, but it gets even better. Qualifying withdrawals are not taxed either, so you can potentially avoid a lot of taxes with these accounts.

These accounts can help fund education costs. You can also make withdrawals that aren’t tied to education but then end up paying extra taxes. If you want your child to graduate from college debt-free, it’s good to include a 529 account into your investment mix.

Teach Your Kid About Money

While it’s noble to build up your kid’s finances, it’s also good to let them know what’s happening. You can use the survivorship benefit as an opportunity to teach your kid about money.

The couple can explain how they are investing the money and show that time in the market beats timing the market. It’s also possible to teach your kid about budgeting. For instance, you can tell your kid that they can only spend $100 on Amazon or a retail store and see how they will spend it.

Parents should be teaching their children about money regardless of whether they are receiving a survivorship benefit or not. However, you can use these regular payouts to build your child’s financial discipline.

Teaching your kid about money increases the odds that they use the money responsibly when it’s time to give control of the funds to your child.

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