A big business these days is educating children about stocks and personal finance. There are books focused on kids and investing. . There are even summer investing camps for kids ("Dear Mom: Send bug spray and my Value Line").

I think introducing children to the investing game at an early age is a good idea, and I'm sure you do, too. After all, the sooner Biff or Buffie understands the importance of investing and savings, the sooner he or she has seven figures in the bank and can take care of dear old mom and dad, right?

Before your kindergarten capitalist becomes the next Warren Buffett, he or she will need to open an account, at either a mutual fund, or a brokerage firm, or perhaps in a company's dividend reinvestment plan. When establishing an account for a child, consider the following factors:

	A common account registration for a child is called a Uniform Gift
	to Minor's Account or Uniform Transfer to Minor's Act, otherwise known as UGMA and UTMA, respectively. In a UGMA, the account is registered in the name of the child, and a custodian (most likely a parent or grandparent) is assigned to the account. The benefit of a UGMA is that taxes on the account are paid at the child's tax rate, which is likely to be much lower than the parent's rate. The downside is that control of the account's assets reverts to the child when he or she reaches the age of majority, which is 18 in most states. Thus, if Buffie decides to run off with Snake the biker when she hits age 18, she can empty her account and do with it as she pleases. Another potential downside to a UGMA is that Biff may have trouble securing college financial aid if he has a big chunk of money in the UGMA. In making financial aid decisions, colleges look closely at how much children can contribute to their college education and would view big assets in a UGMA as dollars earmarked for college.
	Another way to invest for a child is merely to open an account in
	the parent's or grandparent's name and earmark the funds for the child at some point down the road. The upside is that the adult maintains control of the account for as long as desired. The downside is that the adult is responsible for the taxes.

When implementing an investment program for a child, consult with all the parties to make sure the account is established in a way that eliminates surprises down the road.