Simple Ideas

This week my son opened Section 530A accounts for his kids — my grandkids. I gave him the money to fund them. Their accounts are invested, automatically, in an S&P 500 index fund (SPYM)

If you haven’t heard of Section 530A, you’re not alone. Congress created these accounts this year, and most parents have no idea they exist. Here’s the short version:

• Any child under 18 with a Social Security number can have one.
• Anyone can contribute — parents, grandparents — up to $5,000 a year.
• The money goes into low-cost index funds. Right now every dollar goes into SPYM, an S&P 500 fund charging 0.02%.
• At 18, the account becomes a traditional IRA under the young adult’s control.

That last point is the whole ballgame. An 18-year-old handed a pot of money usually does one thing with it: spends it. Unless someone teaches them what that money could become.

$5,000 invested today, growing at historical market rates, can become more than $1,000,000 by age 70 — tax free, if it’s converted to a Roth. That’s not a sales pitch. That’s arithmetic.

I’ve been trying to get this in front of students. I’ve emailed five high school principals offering a free 30-to-40-minute classroom presentation — no selling, nothing promoted, just the math of compounding, taxes, and Roth accounts. So far, no takers.

So let me say it here, plainly, as a grandfather: if you have kids or grandkids under 18, look into Section 530A accounts. Fund one if you can. And then — this is the important part — teach the kid what it is and what to do at 18. The account is the instrument. The instruction is the point.

I wrote a short book about investing without a financial advisor. The first chapter is about Section 530A. It’s free: https://jeffbellamy.com/wp-content/uploads/2026/10/Book_final.pdf. My number is 1-916-342-0682. If you’re a teacher or principal and you want me in a classroom, call me.

Scan the code to download the book (free PDF)

My new book is in draft — read it free, and I’d welcome your input.

With New Introduction on Section 530A

You Don’t Need a Financial Advisor to Invest for Your Future covers the whole approach: start early, keep your costs near zero, use Roth accounts, and let compound interest do the heavy lifting. It also covers the brand-new Section 530A accounts for anyone under 18.

Download the book (PDF)

If you find it useful, share it with someone who’s just starting out.

Well into my adult life I continued to have dreams that I was in High School. When I would get in trouble I would say “I don’t care I’m 56” but I kept returning. These dreams continued and advanced to college but the underlying theme was the same, I had outgrown the problems.

Now I’m retired and don’t need to work to help pay the bills but I still find myself thinking about job interviews. I would be happy to have some employment if it was fulfilling and didn’t interfere with travel, but there is no way I would submit a resume or sit through a typical Interview and be asked “Tell me of a situation where you went above and beyond to provide good customer service”

I posted on FB asking if anyone could hook me up with a Sinecure but I didn’t get any responses.

Let’s face it, I’m checked out. My main interests are my morning Latte’, watching my Portfolio, reading tons of books on my Kindle and telling my wife I adore her. This is interspersed with finding places right on the water to go and chill or spending time with my grandkids.

When the weather is good I like to take long walks or ride my bike along the river. But when it’s the freakin’ dead of winter I just stay around the house.

For me, determining where people were on the political scale was a matter of how they felt about the poor. At one end we had “people are poor because they are lazy”. At the other end we had “there are a host of circumstances that can lead to and perpetuate poverty that are beyond the hands of the poor”.

I have recently been looking at it in somewhat different way. I am now considering a sliding scale of “Us” vs “Them”. This might be a ‘subtle’ point. Some might consider it ‘Trivial’. (this is why I keep most of my ideas to myself).

I imagine that for some people there is a very small group of “Us” and a large group of “Them”. Accepted behavior for dealing with “Us” is very different than dealing with “Them”. Consider the phrase “F*ck them”.

It’s ok to cheat them, to lie to them and to let them suffer and die.

At the other end of the scale are people who have a very inclusive group of “Us”. But consider how much that can vary. “Us” could be everybody in the United States, It could be everybody in the world. It could include all the animals or all living things on Earth. And then there are Extraterrestrials.

I have a mental construct of concentric circles which I use to explain how much I am affected by tragic events. This construct is based proximity.

If a three year old girl falls on the sidewalk outside my house and breaks her nose and is bleeding all over, that is a big deal. If a three year old dies in Mumbai it is less so. This may seem cold hearted but consider this thought experiment where there are billions of planets, each with billions of people. If an entire planet is wiped out but it’s so far away that it takes 100,000 years for us to find out about it, how affected are we?

I personally believe that we as a people need to have compassion for the poor. If you are not contributing to help poor individuals then I strongly encourage you to consider making micro loans through KIVA https://www.kiva.org/

This is a probability problem which most people get wrong. Monty presents three doors. Behind two doors there are Goats. Behind the other there is a New Car.

You are instructed to choose one door. After you choose, Monty opens one of the remaining doors to show you a goat and then asks if you would like to trade the door you originally chose for the remaining door.

Most people believe that the probability of winning the car are the same whether they trade or not. Please give this some thought before you continue reading.

 

 

 

In actuality the odds are twice as good if you make the trade.

There have been lengthy discussions by many intelligent people. The problem finally being put to bed by running a computer simulation which show that trading is the correct choice.

My view on this is simple. This problem is a sleight of hand which confuses people. The sleight of hand is showing that there is a Goat behind one of the remaining doors. Here is why.

How many doors would you have to open to guarantee that you would find a Goat? There is only one car so if you open two doors there has to be a goat behind one of them. Therefor opening one of the two doors to show a goat is MEANINGLESS. It changes nothing in the problem. It is just the same as if Monty had said “behind one of these doors is a Goat”.

Since exposing the Goat is meaningless let’s dispense with it and revisit the problem.

This time you chose one door and Monty asks if you would like to trade your door for the remaining two doors. At this point nobody should have a problem reaching the correct decision. By choosing two doors out of three you are twice as likely to find the Car as you would with only one door.

 

Now you can all sleep at night.

Identity Theft is a Big Deal with Billions of dollars per year being paid out in fraudulent refunds.

So you file your tax return and everything seems fine. What you don’t know is that someone already used your Social Security number and filed a tax return requesting a large refund. They fabricate the income and withholding amounts.

This is what happens next.The IRS compares the income that is reported to them (W-s & 1099) with what was reported on the tax return (The fraudulent tax return since it was filed first).

The IRS accepts ALL of the income claimed on the return but disallows the withholdings. Then they add all of the income and withholdings that were reported to it and send you a form CP-2000 pointing out the discrepancy and showing how much you would owe if the information is correct.

How much will you owe? Let’s assume that you had correct withholding and wouldn’t have owed any money. The CP-2000 will show you owe taxes on the fictitious income declared on the fraudulent tax return. Then you will owe the amount of the Refund. Then you will owe penalties for not having paid them amounts their records show you owed.