Another year has passed, and my daughter’s plan is working out just as we drew it up
years ago. The goal was to ensure that our daughter’s financial future would be bright.
The plan was simple: start early and make the most of the time.

We haven’t diverted from the original plan. When we started JG’s plan at 3 months old, I
told my wife what would happen. We would set up various accounts, encourage our
village to support the initiative, and continue to monitor and make adjustments as
needed. Now that my baby girl is 4 years old, I continue to revel in the fact that the
Smiths are leading by example. However, the Smiths aren’t doing anything much
different than what wealthy families have done for years. We are giving our daughter a
solid financial head start.

The most interesting thing that’s happened in the past year is that some parents are still
hesitant about putting a financial plan in place for their child. It’s kind of weird to hear
parents tell me about all the things they’re doing for their kids, yet when I ask about
saving or investing for their future, they’ll say, “I’ll get to it one day soon.” My response is
always the same. “You’re going to blink, and they’ll be graduating from high school.”
That’s what somebody told me when my daughter arrived four years ago, and time is
zooming. Baby girl can read a little bit, she’s writing her name, letters, numbers, and
short sentences. It’s crazy how fast it happens! As I bear witness to my daughter’s
growth and development, I never forget that her money is growing right alongside her.

So, let’s get into the performance of the various accounts. If this is your first time tuning
in, let me remind you about the three solutions we selected for my JG: (1) bank account,
(2) permanent life insurance policy (variable universal life), and (3) an investment
account (UTMA or Uniform Transfers to Minors Act account)

Bank account (worst performer): This account earns a whopping $0.01 per month in
interest. The account increased in value primarily because JG and I rolled up coins from
her various piggy banks. Yes, we physically count the piles of coins, roll them up, and
then take a trip to the bank to make the deposit.

Life insurance policy: I love that we guaranteed my daughter’s future insurability. As
long as this premium is paid, JG will have lifelong coverage. But the other bonus of this
policy is cash value growth. It’s not growing as aggressively as her UTMA account, but
the selected mutual funds are growth-focused. I can’t wait to see what the cash value
will look like when she turns 18.

UTMA account (best performer): I love watching this account tick up year after year.
When my wife and I sat down to discuss JG’s plan, I told her this was the most
important bucket to focus on. Why? Because I knew that if we (and the village) focused
on funding this account aggressively, it may yield the best returns over time. Even amid
market downturns, I’m extremely confident that this account will continue to deliver the
highest returns over time. One thing I did this year was adjust the investment strategy. I
started this account with one growth mutual fund, and each year I added a variety of
sector ETFs (exchange-traded funds).  However, I realized that my daughter’s financial
future would be in better hands with a professional money manager. So, I made a
switch. I placed all the funds into an actively managed, tax-aware portfolio with one of
the world’s top money managers. I assumed they would do better than little old me over
the next 14 years.  

Lastly, I’d like to extend a hand to anyone who needs assistance with setting up a plan,
as we’ve done for JG. If you would like to schedule a 30-minute strategy session, drop
me a note at jasper.smith@prudential.com and write “Millionaire Baby” in the subject
line.

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The opinions voiced in this material are for general information only and are not
intended to provide specific advice or recommendations for any individual. All
performance referenced is historical and is no guarantee of future results.

The #BuildWealth Movement® works tirelessly to help people Disrupt Generational Poverty® for their families and community.