what is a utma/ugma account?

Welcome back to Pontem Pages. Today’s tip is investing in a UTMA account. Standing for Uniform Transfer to Minors Act, a UTMA account enables you to begin your investment journey today. The concept of a UTMA account is that you establish the investment account and your financial custodian (see below) serves as the account manager until you reach the age of maturity (varies by State- age 21 for Wisconsin) at which point you become the manager of your account. Check out the four simple steps referenced below to start your investment journey:

• STEP ONE: Talk to your parents, grandparents, or another adult family member and ask them to serve as the custodian of your UTMA account. This role requires minimal work for your chosen custodian, as they are responsible for establishing the account and making monetary deposits on your behalf. (Pro tip: Having this conversation can build trust between you and your parents/guardians which can open the door to future finance conversations).

• STEP TWO: Once you determine your financial custodian, it’s time to select the brokerage firm where you want to house your account. Examples include Charles Schwab, Morgan Stanley,  and Merrill Lynch. Please note, some banks have their own brokerages, such as Chase with J.P. Morgan orBank of America with Merrill Lynch, allowing the custodian to easily deposit money into the new account and transfer money from their account or yours.

• STEP THREE: It’s time to establish your account. Most accounts can be set-up online or by visiting a local branch of the bank/brokerage firm. While setting it up online may offer greater convenience, establishing the account in person enables you to speak directly to an investment professional.

• STEP FOUR: Fund the account. Most brokerages accept deposits via wire transfer, ACH transfer, and/or a written check. Check with your firm to determine all available deposit options.