Mowing lawns, babysitting, or scooping ice cream—if your child has a paycheck, you can invest it for their future. This video breaks down how a Roth IRA works for minors and why early contributions matter. Paul shares a real-world example to show the power of compounding over decades. It’s a simple but effective way to start your child building wealth while they are young.

Topics covered:

• Power of compounding
• Roth IRAs for kids
• Summer job earned income
• Long-term tax-free growth

Transcript:

Hi everybody. I’m Paul Sydlansky and welcome to Unlocking Hidden Value. Today we’re going to talk about the power of compounding, and particularly how compounding can help your kids grow their wealth at a young age.

So as we get closer here to summer and kids start thinking about summer jobs, it’s important that you think about opening up a Roth IRA for your child. Remember, you can contribute into a Roth IRA up to $7,000 per year for your child as long as they have earned income up to that amount. So if your child were to be a babysitter or cut grass this summer and they made $5,000, you could put up to $5,000.

Now, here is where compounding comes in. If theoretically, you were able to invest $7,000 a year in this Roth IRA for 42 years up until your child is age 60, a $7,000 investment that grows at just 8%, which is in line with market historical returns, would amass to over $2 million in tax-free money that they would be able to have in their retirement. Again, a $7,000 investment per year for 42 years, you’re looking at over $2 million in tax-free money. Extremely powerful and really one of the best ways to help your child build wealth for tomorrow.

Lake Road Advisors, a Fee-Only, independent financial planning firm with offices in Corning, NY, Ithaca, NY and Portland, OR works with clients virtually all across the country. Paul Sydlansky, the founder of Lake Road Advisors LLC, has worked in the financial services industry for 20+ years. Prior to founding Lake Road Advisors, Paul worked at Morgan Stanley in Manhattan for 13 years. While at Morgan Stanley, Paul was a senior-level manager within the Institutional Equities Department. In 2018 he was named to Investopedia’s Top 100 Financial Advisors list. Paul received a Bachelor’s degree in Economics from Marist College and holds an MBA from New York University Leonard N. Stern School of Business. Paul is a CERTIFIED FINANCIAL PLANNER® and a member of the National Association of Personal Financial Advisors (NAPFA) and the XY Planning Network. They can be reached by phone at the Corning, NY office at (607) 438-2914, Ithaca, NY office at (607) 463-8400, or Portland, OR office at (607) 292-2172 or at the firm’s website at https://lakeroadadvisors.com/