I’m an Wealth Expert – Here’s How Your Child Can Start Generating a Multi-Million Dollar Retirement Fund Before Turning 18

A personal finance expert has revealed how parents can start generating wealth for their children from a young age.

In a viral video post, Haley Sacks advised her 659,000 followers to invest money in a Custodial Roth IRA, a tax-advantaged retirement account.

But there’s one catch: your child must earn a certain income to qualify for an account.

Sacks – who describes herself as a “zilennial finance expert” and “Mrs Dow Jones” – used the example of Beyoncé and Jay-Z’s child Blue Ivy, 11, who previously acted as a backup dancer for her mother. The sound of her crying also appeared on her father’s song “Glory” when she was just two days old.

If Ivy contributed $6,500 a year to a Custodial Roth IRA from age 0 to age 18, she would end up with a tax-exempt fortune of $6.1 million by the time she is 59 and a half. This is despite the fact that she would only have contributed $117,000 of her own money.

The analysis assumes that the money benefits from compound growth each year with an annual return on investment of 8 percent.

In a post, Sacks wrote, “These tax-advantaged retirement accounts are great for growing kids’ wealth.

“The only problem is that the child must have an earned income to qualify — you can’t fund it yourself.

“BUT if you have your own business, you can hire them!” That’s what Jay-Z and Beyoncé did!”

A Custodial Roth IRA is a new way for your child to save for retirement before they turn 18.

While they must have some sort of “earned income,” it could be for providing services like babysitting or selling lemonade — as long as they pay taxes on it.

The contribution limit for custodial Roth IRAs is $6,500 or the total amount your child earned that year — whichever is less.

Such accounts are funded with after-tax dollars, meaning your child will not pay any income when your child chooses to take it in retirement.

The biggest benefit of getting your child to start saving early is that they benefit from greater compound growth.

Compound growth is the process of earning interest on the money you initially set aside plus the interest you accrue.

For example, if you invested $10,000 with an annual return of 10 percent, you will have $11,000 after a year. The following year, the 10 percent interest is applied to the $11,000 instead of the original amount.