So I have a friend of the family in another state who has a kid that is graduating high school. Instead of just handing them money as a gift, I want to give them an investment with the idea that it is a small starting point, and if they don't touch it and add a small amount to it each month over the years it will grow significantly.

I'm trying to find the best way to do this since they're not my kid and I don't plan to have any visibility into it once I give it to them.

I don't know if I should have them set up their own Schwab account and then transfer shares of something into it as the foundation. Or setup a Roth for them or have their parents do it and set the investments for moderate growth so that they can fund it each month.

Just trying to consider the best option for this situation. How would you approach this? Thanks for any suggestions.

If you choose the Roth option, the kid has to have earned income, and you would need to verify that the kid, the parents, or others did not also contribute to a Roth for the kid in an amount such that the total contribution (the others plus you) does not exceed the earned income nor the annual contribution limit.

I did the same thing (set up invesment accounts, IRA accounts) for my children and investment accounts for my grandchildren. Did the latter in hopes the parents would put funds in the accounts and so far they have done so though not much.

Yeah the Roth requirements are why I was thinking of a Traditional IRA route or a setup like with Acorns or some similar ETF service where they can just go in and drop some amounts regularly and have it grow over time without having to monitor anything. At the same time, they'd lose the long term tax benefits of the Roth.

I commend you for attempting to kick start the kid's financial future. However, I think it's a bad idea. Most likely, nothing else gets funded into it and the kid forgets about it in a few years.

I always recommend precious metals in these situations. A 10th ounce of gold or 10 ounces of silver is in your budget range. Tangible. Stick it in the bottom of a sock drawer and forget about it. At least once it's forgotten about, one day it's found again at the bottom of the drawer.

Or, just run with cash.

Kids want cash . Give them cash

I do half and half for my godson. He has shown a little interest in the stock. I think one thing that helped was involving him in choosing the stock - he chose Disney, but he is a child. This started during COVID so I think he is still up overall, but he really like the idea of dividends. Not sure exactly how valuable the lesson is, but he is showing at least a bit of interest.

Are they fiscally responsible?

I was going to start accounts for my children, but was told that my son who is 18 could withdraw it immediately anytime I put $$ into it. So instead we now have 2 more IRA's that are in our names with the kids each being the beneficiary on one.