19 Minute Read

Friday Feature – Tend to Your Minors Business

February 19, 2021

By | 4 Comments

Greetings Traders, 

I trust that the markets have been treating you well for we’ve had quite the adventure as we start to wrap up earnings season and the GameStop frenzy. The longer I become a trader the more I realize that markets are going to what the markets are going to do and sometimes we get on board for the ride and other times it is just best to sit on the sideline and be a spectator. Having the ability to decide whether or not to participate in mild waves of the market like earnings on Coca-cola or the big waves of bitcoin is a matter of personal preference. When you are new to trading it can be quite overwhelming. While learning to develop your trading skills, you get exposed to a lot of different ideas and end up feeling like you are being pulled in a thousand different directions. Believe me, I was there! 

Eventually, things do start to make sense and before you know it one year, three years, five years have gone by just like that! My kids were 10 and 6 when I got started six years ago now, they are 16 and 12 and it feels like it was just the other day. Besides navigating through the markets, and learning your broker software, there is also the business side of trading and investing. Like many, we start with an individual trading account and if one plans on treating their trading as a business, then the process of structuring entities begins based on whatever recommendations your CPA or Tax Attorneys provides that best suit you at the time. Whether these types of accounts are in your name or under the name of the entity you create, it is common to have a margin account and a type of retirement account like an IRA, Roth, Solo 401K, etc. Just like learning how to trade, the more you learn about different types of accounts the more overwhelming it can be especially for people like myself that were itching to get started right away. Often we put all our focus on the daily activity that happens inside our brokerage accounts and education to improve our skill sets and forget other areas of the business. Owning physical commodities for example. You can consider owning physical gold or silver to be a part of your long-term investment in your portfolio. Meaning, that you are not concerned about the day-to-day price movements because you are holding for it for the next ten to twenty years or forever. 

There is another part of our business that we tend to overlook and that is our children. Our children, believe it or not, are a part of the business! After all, they are the main reason most of us chose to get financial education and learn how to generate an income and create wealth so they can have a better future right? It was at least for me yet I did not consider at the time to open any sort of minor account like a custodial minor account or IRA for a minor for them to start their investing journey. 

Now, it could be that there was no real need to open a child IRA at the time which is a discussion one should have with their CPA or tax attorney to determine the eligibility of which account you can or cannot open according to IRS guidelines. The best time to have these discussions is when they are preparing your annual returns. 

Let’s say that for this topic I open an Individual Retirement Account for my kids. Any child regardless of age can contribute to an IRA if they have an earned income. There are 2 types of IRAs for kids. Traditional and Roth with the difference being how they are taxed. With a traditional IRA, the taxes are deferred therefore your child will pay taxes on contributions and earnings when they withdraw at retirement. Unlike the Roth IRA, where taxes are paid when the money is put in so as the account grows and they begin to withdraw, it is considered after-tax money. Your child can earn their income by working for an employer where they get a w-2 or 1099. Other jobs like selling lemonade, babysitting will require record-keeping of work and amount paid. Your child can also work for you in your own business doing tasks that are age-appropriate for reasonable wages. In other words, it wouldn’t be ideal to pay your child $500 to clean the bathroom. Click here more on Benefits of a Child IRA

Your child can decide to either contribute part or all of their earnings into their IRA. The maximum amount to contribute for 2021 is $6000 for Traditional or Roth. So if your child earns $8000 in 2021 they can only contribute $6000. Now here is where the magic begins for a Roth IRA. Now I doubt that you’ll be able to convince a teenager to contribute their entire earnings to their Roth however parents, grandparents, or anyone for that matter can match the amount your child contributes into their Roth as an incentive to encourage your child to maximize their contribution. If your child earns $8000 in 2021 and elects to contribute $6000 to their Roth, you can match up to $6000 as well. Once the money is contributed to the Roth, there is still the matter of what to invest in. Engage your kids as much as you can. You’ll be amazed to know what they learn from tik tok. Lol! Or you could keep it simple and go the index funds route. Take a look at IWM and SPY appreciation from 2015-2021. Keep in mind this a buy and hold for your child’s account no advanced strategies done i.e. cash flowing with covered calls are being considered here but they could certainly be done.

For the older kids and young adults, you could have conversations about individual stocks. Maybe discuss owning dividend-paying stocks but also allow them to research and bring growth stocks hip enough for them into the mix. Encourage them to continue to make contributions each year and match part or all of their contributions and have a plan maybe quarterly to review accounts. Do a little show and tell without overwhelming them. Ask for their opinion to see if they are showing an interest in the process. It could be as simple as looking at the holdings in the DIA or SPY ETFs.  Have a financial education class at home make it fun with pretty colors and pictures like the ones below from TOS.

It’s a good idea to periodically check your current business structure to make sure you are maximizing the benefits of retirement accounts. Often when we are new we don’t know much about anything but as you continue to evolve part of being a good investor is to make sure that the baskets that are holding your eggs are also the best ones. That might mean one thing for you and something else different for another just make sure it’s what best fits your needs for you and your family.

Ladies tonight we shall explore this more tonight when we gather for our Women in trading webinar at 8:30 pm est. See you there! Women In Trading Webinar

Until then,

Coach Em

Emily Muiruri

Emily Muiruri

Emily Muiruri was born and raised in Nairobi, Kenya before her family moved to the US and settled in Maryland, Emily began her trading journey in January 2015 after 17 years of Property Management in the Self-Storage Industry. Like many new traders, Emily started off with directional trading strategies such as long calls, long puts and very little in cash flow strategies. Over time that has changed and now her core trading strategies are cash flow based such as are Covered Calls, Naked Puts, and Iron Condors. Though she is still a student learning and enhancing her trading skills, she has a strong desire to teach women to take control of their finances and become traders. Writing blogs is one of the ways she’s is looking to spread the word and get more women involved. Emily knows that with the right education and trading system women can be successful traders.

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4 Replies to “Friday Feature – Tend to Your Minors Business”



  2. MattGuarino says:

    Excellent post

  3. MichaelProkop says:

    Thank you for another constructive article Coach Em!

  4. JimGuanzon says:

    Great article thanks Emily

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