Nobody enjoys a stock market downturn, especially those who rely more on returns to survive due to a lack of active income. But as parents, we can use these sell-offs as an opportunity to help turn our kids into future millionaires.<\/p>\n
Although I\u2019m a perennial optimist, I believe our kids are kind of screwed. The world is getting more competitive by the day, AI is set to eliminate millions of jobs<\/a> by 2040, and now it takes near-perfect SAT scores and GPAs just to have a shot at college. Long gone are the days when you could graduate from anywhere and be set for life\u2014supporting a family of four on one steady income.<\/p>\n But here\u2019s the upside: I believe there\u2019s still a way for kids to live comfortably, even if they get rejected from every school and company they apply to. And that\u2019s by making them wealthy. With at least $1 million in investments, they won\u2019t need to chase elite schools or high-paying jobs in tech, finance, law, or medicine. They can live with purpose, free from the pressure to \u201cmake it big.\u201d<\/p>\n Unfortunately, I don\u2019t see signs of genius in my kids, at least not yet. That means they probably won\u2019t be getting perfect scores or the big scholarships needed to make college affordable. So, like any loving parent, I\u2019m stepping in to help.<\/p>\n I love having specific financial goals to keep me motivated. One of my newest? Helping my two kids build $1 million portfolios by steadily investing in stocks. It might sound crazy, but what\u2019s crazier is not creating an insurance policy in this unforgiving world.<\/p>\n <\/p>\n With my new book,\u00a0Millionaire Milestones: Simple Steps To Seven Figures<\/a><\/strong><\/em>, coming out on May 6, I\u2019ve become obsessed with helping readers build lasting wealth. I recently re-read the manuscript and felt a surge of excitement. Not just for my own journey, but for my kids\u2019. I\u2019m confident you\u2019ll walk away from the book fired up to take action too.<\/p>\n There are countless ways to grow wealth, as outlined in the book. But for kids, two of the easiest vehicles are Roth IRAs<\/a> and custodial investment accounts (UTMAs). In this post, I want to focus on stock investing for our children, especially during market downturns.<\/p>\n On April 7, the market briefly dipped back into bear territory\u2014down over 20%\u2014after Liberation Day failed to excite investors and Trump\u2019s proposed tariffs shocked expectations. While others were panicking, I saw this chaos as a golden opportunity to invest for my kids, who still have 10\u201313 years before reaching adulthood.<\/p>\n But first, here\u2019s why investing for your children might help YOU just as much as it helps them.<\/p>\n If you\u2019re a parent reading Financial Samurai, I know you want the best for your children. That\u2019s why you\u2019ve likely opened 529 plans, Roth IRAs, or custodial accounts for them already. The more you help them, the less you will worry about their future<\/em>.<\/p>\n At the end of 2024, I made a mistake. Despite being cautious on the markets\u2014as I wrote in my 2025 S&P 500 forecast<\/a>\u2014I contributed several thousand to my son\u2019s UTMA account, just like I had for the past seven years. The market was stable for a bit\u2026 then tanked. Classic. I felt like a fool.<\/p>\n But when the S&P 500 continued its slide, I saw a chance to buy the dip in his account. His balance was about $70,000 after<\/em> the latest year-end contribution, small enough that any loss could be completely offset by further investing. In essence, I had the power to erase the dip, and my bad timing entirely<\/em><\/strong>. Psychologically, that felt wonderful!<\/p>\n My portfolio? Not so lucky. After 29 years of building it up, it was simply too large to backstop. I no longer had a six-figure banking job and let\u2019s be honest, writing is one of the lowest-paid professions<\/a>. There wasn\u2019t much I could do to stop the nose dive.<\/p>\n If I couldn’t save my own portfolio from nosediving, at least I could save my kids’ portfolios.<\/p>\n Buying a dip is never easy. You don\u2019t know when it\u2019ll end, and those head fakes can wear you down. During the Trump tariff war, the market dropped for almost 40 straight days. It could still return to the lows given there’s not much progress with China and a recession<\/a> is highly likely.<\/p>\n I worried about how many years of gains I might lose from being overexposed to stocks. Maybe my ~28% net worth allocation to stocks was too high after all. As every stock investor knows, the key to building great wealth is time\u00a0in<\/em>\u00a0the market, not timing the market. <\/p>\n But with my son\u2019s UTMA, each drop felt like an opportunity. I had no fear<\/em> investing for him (and my daughter) because I knew the time horizon was long. And once I transferred the funds out of my own account and into his, the burden lifted. That money wasn\u2019t mine anymore. It was up to the stock market gods to do their thing. <\/p>\n While my own portfolio was bleeding red, I\u2019d look at his account and feel joy. Yes, it was technically the same pool of money being shifted, but his account felt like it had been blessed. It was artificially surging.<\/p>\n Every dollar I invested for him after the drop made me feel like a more responsible parent. It became a way to fight back\u2014against the markets, against my own doubts, and against the mistake of mistiming the market earlier.<\/p>\n The funny thing is, every person wealthier than you could, in theory, can help wipe away your losses during a bear market. I sometimes dream about this when my own stock portfolio is getting pummeled.<\/p>\n If your $5 million portfolio is down 20%, like one couple I saw with inappropriate stock exposure<\/a> for their ages, a centi-millionaire could easily gift you $1 million to make you whole again. Unfortunately, you probably don’t know anyone willing\u2014or able\u2014to do that for you.<\/p>\n But when it comes to your children, the story changes. You love them more than anything, and you will do whatever it takes to keep them secure. And that’s exactly what you can do by buying the stock market dip for them and building a beautiful investment portfolio.<\/p>\n Not only will they benefit financially in the future, but you\u2019ll also benefit psychologically by fulfilling your role as a provider<\/a>.<\/p>\n Both of my kids\u2019 custodial investment accounts are 100% stocks. It\u2019s the right asset allocation<\/a> for them, given their 10+ year time horizons and relatively small portfolios. However, once a custodial account crosses the $100,000 threshold the potential for loss starts to feel more real.<\/p>\n A 20% bear market would translate to a $20,000 paper loss. This is just above the 2025 annual gift tax exclusion of $19,000. So once your child\u2019s UTMA crosses $100,000, it\u2019s worth considering dialing down the risk by shifting more into bonds. If we enter a stagflationary environment<\/a>, the S&P 500 could easily retest its lows.<\/p>\n I\u2019m also under no illusion<\/em><\/strong> that my son\u2019s UTMA account will always look this good. This is likely the peak before a long, bumpy ride. And that\u2019s fine as it still provides psychological relief compared to my own portfolio, which has taken more of a beating.<\/p>\n But I\u2019m not backing down from stocks. Because his account isn\u2019t mine and is smaller, I\u2019m comfortable staying fully invested. Every future 10%+ correction will be filled with another injection by me. I promise.<\/p>\n As I wrote in\u00a0Millionaire Milestones<\/a><\/strong><\/em>, the most important checkpoint before reaching $1 million is getting to $250,000. That\u2019s the point where compounding truly starts to work its magic.<\/p>\n We know stocks finish higher 70\u201375% of the time each year. Historically, the S&P 500 returns around 10% annually. At a $250,000 portfolio size, a 10% return equals $25,000\u2014more than the annual gift tax exclusion or the 401(k) employee contribution limit. Once you hit that number, the portfolio starts working harder than you<\/em>.<\/p>\n So, I\u2019m sticking with a 100% stock allocation in my son\u2019s UTMA. At a 6% compound annual growth rate with $19,000 in average annual contributions, his portfolio should surpass $250,000 by age 15. At that point, I\u2019ll reassess the risk and potentially reallocate toward more bonds.<\/p>\n There are a few ways to think about asset allocation in your child\u2019s UTMA account. The wrong way? Just matching your own portfolio. You\u2019re older, have different obligations, a larger net worth, and a very different risk profile.<\/p>\n Logically, your child\u2019s UTMA account should carry more risk, given their age, future earning power, and smaller portfolio size. You can always follow my age-based stock-and-bond allocation guide<\/a>. It\u2019s a smart approach.<\/p>\n But here\u2019s another method I like:<\/strong> compare the size of their UTMA account to your total stock portfolio. If your stock portfolio is at least 20X the size of their custodial account, you should feel comfortable keeping their allocation stock-heavy until they turn 18. At 10X the size, you can start considering dialing back risk or focusing more on your own retirement portfolio again.<\/p>\n Once they\u2019re 18, sit down with them and discuss their goals and how different portfolio compositions can affect their future. Fortunately, I\u2019ve also compiled historical returns for various stock-bond mixes<\/a> to help guide that conversation.<\/p>\n Unfortunately, I won\u2019t be able to make my son a millionaire by the time he\u2019s 18 just through just his custodial account. At a 6% compound return with $19,000 annual contributions, his portfolio will grow to about $366,000 over 10 years.<\/p>\n Still, $366,000 is a strong foundation for adulthood. It’s past the important $250,000 threshold to get to $1 million. If he gets rejected from 95% of the colleges he applies to\u2014as I expect\u2014he\u2019ll have the financial cushion to take a gap year, study abroad, start a business, or apprentice in the trades.<\/p>\n And if he lets the portfolio compound untouched at 6% with no additional contributions, it should grow to $1 million by age 35<\/strong>. Knowing that helps me sleep well at night. There\u2019s even more upside if he decides to contribute on his own and invest aggressively as an adult.<\/p>\n If this strategy appeals to you, feel free to follow it! You can even cheat a little by adding the balances of your child\u2019s 529 and Roth IRA accounts to hit millionaire status sooner. But I think there\u2019s something elegant about focusing on one account and building it up as much as possible.<\/p>\n Readers<\/strong>, what are your thoughts on taking advantage of stock market downturns to help make your kids millionaires?<\/em> Is this a foolish goal that risks creating unmotivated adults? Or is it a wise move to build their financial foundation early\u2014an insurance policy against years of rejection, uncertainty, and stress?<\/em><\/p>\n If you want to become a multi-millionaire and help make your kids millionaires by the time their frontal cortex fully develops, pick up a copy of\u00a0Millionaire Milestones: Simple Steps To Seven Figures<\/a><\/strong>.<\/em>\u00a0I’ve distilled over 30 years of experience to help you and your children build more wealth than 93% of the population.<\/p>\n Once you finish the book, you’ll be motivated to take action toward achieving financial independence. I was pleasantly surprised by how pumped I got re-reading\u00a0Millionaire Milestones<\/em>\u00a0and methodically buying the stock market dip for both my children’s UTMA accounts. Let me help you take action to build greater wealth for your family.<\/p>\n If you believe AI will eliminate millions of jobs and make finding well-paying work harder for your children, consider investing in the top private AI companies. This way, if the AI revolution plays out, you\u2019ll likely profit handsomely. And if it doesn\u2019t, at least you’ll have given your children a greater financial cushion as they try to support themselves. <\/p>\n One of the easiest ways I\u2019ve found to invest in private AI companies is through Fundrise Venture<\/a><\/strong>. It provides exposure to some of the top names, including OpenAI, Anthropic, Databricks, and Anduril, among others. With just a $10 minimum, it’s an accessible option for almost anyone.<\/p>\nThe Stock Market Downturn Will Help Create Future Millionaires<\/strong><\/h2>\n
Why Investing For Your Kids Helps You Too<\/strong><\/h2>\n
A Huge Psychological Win As A Parent To Invest For Your Kids<\/h2>\n
Create An Investment Portfolio Winner For Your Kids <\/strong><\/h2>\n
![\"Take](\"https:\/\/i2.wp.com\/financialsamurai.com\/wp-content\/uploads\/2025\/04\/Financial-Samurai-UTMA-1-647x500.png\")
When The Custodial Investment Account Gets Too Large<\/strong><\/h2>\n
![\"Taking](\"https:\/\/i2.wp.com\/financialsamurai.com\/wp-content\/uploads\/2025\/04\/buying-the-dip-son-UTMA.png\")
The First Step to $1 Million Is Hitting $250,000<\/h2>\n
When to Reduce Risk in a Custodial Account<\/h2>\n
![\"Historical](\"https:\/\/i2.wp.com\/financialsamurai.com\/wp-content\/uploads\/2025\/04\/growth-portfolio-composition.png\")
<\/figure>\nWon\u2019t Hit Millionaire Status by 18\u2014And That\u2019s OK<\/h2>\n
Your Guide To Becoming A Multi-Millionaire<\/strong><\/h2>\n
![\"Millionaire](\"https:\/\/i2.wp.com\/financialsamurai.com\/wp-content\/uploads\/2021\/01\/millionaire-milestones.jpeg\")
<\/a>Hedge Against Artificial Intelligence Eliminating Jobs<\/h2>\n
![\"Fundrise](\"https:\/\/i2.wp.com\/financialsamurai.com\/wp-content\/uploads\/2025\/04\/Fundrise-Financial-Samurai-Venture-2025-Dashboard.png\")
<\/a>