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Parents and grandparents have been asking a lot in the past year about how to get their children and grandkids started as investors.

I started this blog post as a way to provide names of investment firms that offer in-trust-for accounts, where parents and grandparents contribute to an account with a minor child as a beneficiary. Then I realized that, in 2022, getting kids into the housing market is at least as important as introducing them to the stock market.

In-trust accounts can be used for any purpose – to introduce young people to the long-term benefits of investing in stocks or funds, to augment a registered education savings plan as a fund of money for postsecondary education or travel, or to gradually build a down payment on a house that might not be bought for a decade or more.

Minor children generally cannot open investment accounts. An in-trust-for account allows an adult to open an account, with the child as beneficiary. Capital gains in the account are taxed in the hands of the beneficiary, who almost certainly will not have enough income to actually pay taxes. Dividends and interest income are attributed to the parent or grandparent who contributed to the account.

The trick with in-trust-for accounts is finding an investment firm that offers them. A reader recently contacted me to ask for alternatives after a mutual fund company he was dealing with for in-trust-for accounts announced it would no longer offer them. To find alternatives, I asked the 13 participants in my latest online brokerage ranking (to be published Feb. 4) if they offered in-trust-for accounts. Here are firms that said they do offer this type of account:

  • BMO InvestorLine
  • CIBC Investor’s Edge
  • CI Direct Trading
  • Desjardins Online Brokerage
  • Interactive Brokers
  • National Bank Direct Brokerage
  • Qtrade
  • Questrade
  • TD Direct Investing

A young person who is 18 and up can open a tax-free savings account, which is a huge simplifier. Parents and grandparents can give money to a TFSA-holder, with zero tax issues for either party. Helping those younger than 18 presents a challenge that can be addressed with an in-trust-for account.

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