I want to pay my late 60s parents $1,000 monthly for babysitting. They refuse the money: should I invest it for them instead?

A listener named Carrie Anne wrote into the Rich Habits Podcast with a problem many adult children would recognize. She wants to pay her late 60s parents $1,000 a month for watching her kids. The parents refuse the cash and, in her words, would likely spend any of it on toys and clothes for the grandkids anyway.

Host Robert Croak’s answer: open a joint brokerage account, invest the money in their name, and build them a nest egg whether they engage with it or not. “I love this idea. It’s super simple. You could sit down with her, do it in a few minutes, maybe 10 or 15 minutes, get it up and running, and then really set them up,” Croak said. Co-host Austin Hankwitz layered on the math, suggesting roughly $900 a month into dividend-paying ETFs like SPY and the NEOS Nasdaq-100 High Income ETF (NASDAQ:QQQI).

The Verdict: Right Instinct, Wrong Account Structure

The investing instinct is right. The joint account part is where things can go sideways.

Putting the money to work beats handing over $1,000 in cash that gets converted into Amazon orders. The mechanics Hankwitz described are real. “$900 a month over the course of 12 months is about $11,000, which will then begin to pay about $100 a month of income,” he said. At the SPDR S&P 500 ETF (NYSE:SPY)’s current dividend yield near 1%, $11,000 invested produces a modest income stream that grows as both the share count and per-share dividend rise over time.

Then comes the compounding. SPY trades near $750 today. Long-run S&P 500 returns are closer to 10% nominal, and after subtracting core PCE inflation, which has run approximately 3.3% over the past twelve months, real returns land closer to 7%. That trailing decade for SPY has been especially strong, so investors should temper expectations around that long-run 7% real figure rather than extrapolating recent results.

Run $900 a month at a 7% real return for 20 years and the portfolio lands near $469,000 in today’s dollars. At 10% nominal for the same period, the figure is closer to $683,000. With parents potentially living another 20 to 30 years, Hankwitz’s pitch of building “a huge nest egg that passes directly on to the kids” is realistic arithmetic.

The Variable That Changes Everything: Whose Name Is on the Account

Croak proposed a joint account. That is the part worth slowing down on.

A joint brokerage creates mutual liability. If a parent gets sued, has a car accident with insufficient insurance, or accumulates medical debt, the entire balance is exposed to their creditors. The reverse also applies: if you face a lawsuit or divorce, your parents’ nest egg sits inside the contested estate. Estate planning attorneys routinely flag joint titling between adult family members as one of the most underappreciated risks in family finance.

Three cleaner structures exist:

1. A taxable brokerage in your parents’ names only. You gift the monthly amount. The 2026 annual gift tax exclusion sits at $19,000 per recipient per donor, so $900 a month per parent fits inside the limit with no gift tax return required. When they pass, the assets receive a step-up in cost basis, erasing embedded capital gains for heirs.
2. A taxable brokerage in your name, earmarked for them. You retain control, you pay tax on dividends and gains, and you decide the disposition. No step-up at death because the account never passes through their estate.
3. A transfer-on-death (TOD) account in your parents’ name with you as beneficiary. Same tax treatment as option one, with a direct transfer at death that skips probate.

One additional note on the gift tax picture: the One Big Beautiful Bill Act permanently locked in the elevated lifetime gift and estate tax exemption at $15 million per individual in 2026, eliminating the prior risk of a sunset to a much lower threshold. That means even larger gifts over time carry no federal gift tax risk for most families.

The right choice among those three structures depends on whether you trust your parents not to touch the account, whether their estate carries creditor exposure, and whether step-up basis matters given the eventual portfolio size.

What to Actually Do

1. Settle titling before anything else. Do not open the account until that decision is made.
2. Open a low-cost taxable brokerage at any major custodian. SPY carries an expense ratio under 0.1%, and its top holdings include NVIDIA at roughly 8%, Apple near 7%, and Microsoft around 5%, giving the parents broad exposure to the U.S. market in a single ticker.
3. Automate the monthly purchase so it stops being a decision you revisit.
4. Document the arrangement in a one-page letter so everyone, including future executors, knows the account’s purpose.
5. Revisit the structure if your parents’ health, your own balance sheet, or estate tax law shifts materially.

Croak and Hankwitz nailed the spirit of the answer. The math works. The one word they glossed over, “joint,” is the one worth a second look.

Editor’s note: This article has been updated to reflect current SPY data (price near $750, dividend yield near 1%), the latest core PCE inflation reading of approximately 3.3%, current SPY top-holdings weights (NVIDIA roughly 8%, Apple near 7%, Microsoft around 5%), and the passage of the One Big Beautiful Bill Act, which permanently extended the $15 million per-individual lifetime gift and estate tax exemption.