Kids UTMA Brokerage Accounts - Reducing Risk
When each of my kids were born we opened up savings accounts in their name and started contributing $100 a month to them. Then when Covid hit and interest rates skyrocketed I looked at the 0.1% they were making and moved everything we had saved up to that point into some iSeries savings bonds when they were up in the 7 - 9% range. Did that for 15 months until they dropped back down and after reading some investment info, including here, in October 2023 I put all their money into UTMA brokerage accounts. I split them about 60% VOO, 20% VTI, 15% SGOV, and 5% left in the default cash account. Kids are allowed to make up to $1300 tax free so near the end of the year I try to move stuff around like selling enough VOO for a profit under $1300 then buying FXAIX, waiting until the next year, then back into VOO. This way I can realize gains under the $1300 limit without paying taxes on them. Long story short their accounts have done fairly well and are both up around 60% since I opened them.
Now we are getting to the point where the first one will need a car in a year and hopefully college expenses a couple after that. Market is at all time highs and that makes me nervous....I've done a lot to maximize gains and reduce expenses on this money. Is this the point where I should start backing out of my VOO/VTI holdings and start moving to BND or move more into SGOV? If I were leaving this money in there until they could take over the accounts when they are 22 or 23 (whatever year my state has set) I would just leave it but this was money we intended to save up for major expenses for them and if anything was left (hopefully) they could take it over after the fact. Or do I go the very safe route and look for a high yield savings account? Were not talking a ton of money but all the kids accounts combined are probably around 30k right now.