Every parent wants to give their child a head start in life, especially if they grew up without financial security themselves.

The desire to break such a generational curse is powerful, but so is the fear of making the wrong move, since a bad investment could derail years of careful planning. This is exactly what a Reddit user is faced with now.

The investor, a dad of a 2-year-old, has asked for advice on building a $1 million portfolio for his son with the goal of having him live comfortably off dividend income by age 34. The poster is determined to set his son up for financial freedom, so he’s already started a “mini portfolio” with a combo of dividend-oriented ETFs and speculative stocks: Schwab U.S. Dividend Equity ETF (NYSE:SCHD), Astra Space (NASDAQ:ASTR), Virgin Galactic Holdings (NYSE:SPCE), and Vornado Realty Trust (NYSE:VNO).

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“We are looking for blueprints or instructions on proper investing for our children. How to create wealth is more important than wealth itself. We really would like to make sure he is financially responsible beforehand,” the dad wrote.

His concerns involve picking the right investments to balance growth and dividends in the next 30-plus years, avoiding costly mistakes, and ensuring his son is financially responsible. The responses to the investor’s post were a mix of encouragement and caution, with many Redditors coming up with suggestions of assets.

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$1 Million Portfolio for a 2-Year-Old–Reddit Advises Dad on Allocations

ETFs are Safe for the Long Run

Many commenters suggested individual stocks are too risky for a 30-year investment horizon, and recommended low-cost ETFs instead.

“Not an expert at all, but I’m thinking safe ETFs with high quality companies. Time will take care of everything. Thinking simple: SCHD, [SPDR S&P 500 ETF Trust (NYSE: SPY)],” a comment reads.

A Redditor suggested a mix between dividend-focused and tech assets, which provide both growth and regular payments.

“[Vanguard High Dividend Yield ETF (NYSE: VYM)], [Vanguard Dividend Appreciation ETF (NYSE: VIG)], [Invesco QQQ Trust (NASDAQ: QQQ)]. This is dividend + tech. That’s what I would bet on for 30 years. Dividend low-fee ETF + some growth inform of tech. I personally would pick stocks for the QQQ portion of the fund [(Apple (NASDAQ: AAPL)] + [Microsoft Corporation (NASDAQ: MSFT)] + [Alphabet (NASDAQ: GOOGL, GOOG)] + [Amazon  (NASDAQ: AMZN)]).”

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“I remember someone showing the Top 30 or 20 companies by market cap in 1980/1990 and then the new list in 2020 and every one of them had changed/dropped off, bar 1. Might be a good argument for an ETF if you're thinking for the kid,” a Redditor advocated.

This user also advised the investor to choose ETFs instead of individual stocks because in such a long period, companies can change a lot.

“I would avoid single stocks and go with a few ETFs because you talking 16 years before they turn 18 and have that last many years, a lot can change with an individual company,” he said.

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Set Up a Trust

Several Redditors warned the poster that giving a young adult sudden wealth can backfire, so he should consider setting up a structured trust with gradual payouts.

“OP could set up a trust for their kid where a percentage is released at 18, another at 30, 100% at 50, or however he sees fit. It doesn't stop the kid from possibly becoming a d–k, but it would minimize the risk of them blowing everything before they're fully matured. He could even add in a clause that allows additional access to money at an earlier age for things such as education or buying a house,” a commenter wrote.

A Reddit user said he won’t tell his children about the money he set up for each of them until they’re 30.

“I'm not telling my kids about anything I'm putting aside for them until they're 30. Everyone I know that inherited large sums of money before 30 pissed it all up the wall,” he said.

“Be very careful what you tell him or her. There is a difference between being a wage slave but also learning the importance of hard work. Tell a kid that they got money coming mid-30s? I would have screwed around in my 20s and felt entitled to that money,” another comment reads.

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This article Dad With 'Mini Portfolio' And $1M Investment Plan Wants Son 'Living Off Of Dividend Income Comfortably' – Reddit Debates Best Stocks To Buy originally appeared on Benzinga.com

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