I Opened 4 Custodial Accounts for My Baby Nephews. Here's How Much They've Grown

When my wife was a baby, her auntie opened a gift account and invested a few thousand dollars in a low-cost mutual fund. Today, 36 years later, that account is worth about $45,000.

We've never touched the money. Our plan was always to pass it on to the next generation.

So when our first nephew was born nine years ago, we started a tradition. We opened a custodial brokerage account with $2,500. Then came nephew number two, three, and four. Each got their own account with the same setup.

Now we've got four accounts growing steadily (soon to be five -- we're expecting a niece in November!). The plan is to use these gift accounts to teach the next generation about money.

Why I picked custodial brokerage accounts

There are a bunch of ways to invest for kids.

529 plans are great for education expenses. Roth IRAs work if the kid has earned income. You can even give money in a plain savings account for simplicity.

But I went with UGMA/UTMA custodial brokerage accounts with Fidelity. Here are a few reasons I liked this option the best:

• The money isn't locked into education or retirement. The kids can use it for anything when they turn legal age and the account transitions to them.
• Any adult can be assigned as the "custodian." In our case I manage all the kids' accounts, but I like the flexibility to change it to their parents or someone else if needed later.
• I can invest in index funds, just like how I manage my personal portfolio.
• With Fidelity, there are no trade fees, minimums, and the set-up was super simple.

Custodial accounts aren't perfect. They can count as the child's asset for financial aid purposes.

And if they don't have any financial discipline by the time they gain account control, they could blow the money and the gift might backfire.

But this setup works for our family. And we're going to do everything in our power to raise kids who understand the value of money.

Here's my full review of Fidelity if you're looking for a good brokerage and want to see why I'm such a fan.

How they've grown with index funds

The best way I know to teach kids about investing… is to actually show them how I invest.

Every one of these custodial accounts holds the same thing -- a total stock market index fund. It's super basic, and I haven't traded any stocks or stressed about anything since they were set up.

Here's how the accounts have grown since the year each nephew was born.

My original hope was to simply double the initial $2,500 gift money every 10 years. So by the time each kid turns 20, the accounts might have around $10,000 each.

But they've already grown faster than that thanks to a strong stock market.

And honestly, it's not about the exact dollar amount. It's just proof that starting early, keeping it simple, and leaving the money alone actually works. Patience pays off.

Passing down more than just money

Giving a kid money is one thing. But if they don't understand how it works -- or how to manage it long term -- it can disappear pretty fast. That's why the teaching part matters way more than the dollar amount.

Right now, we haven't told the kids about these accounts. We're still focused on the basics, like saving money they get for chores, delaying gratification, and how to spend thoughtfully.

But as they hit their teen years, my hope is to sit side by side with each of them and walk through how investing works, what compound growth looks like, and how this money fits into a bigger picture.

Money can be a stressful, taboo topic in some families. I want it to be the opposite in mine.

Looking to start your own investing tradition? Check out our list of the best brokerages in 2025 to find the right fit for your family.