Nicole Lapin

That's what compounding does for you when you're early.

Now, here's the move that most parents don't know about.

The IRS allows for something called super funding.

You can front load five years worth of contributions up to $95,000 per beneficiary without triggering federal gift tax as long as you don't contribute again during those five years.

And if you need a refresher on the federal gift tax rules, I just did an episode about that and I'll link it in the show notes.

So if you come into some bonus cash, this is one of the smartest places to direct it.

One lump sum that gets 18 years of tax-free growth to do its thing.

And just to really follow the money trail here, in the last example, I said contributing 54K spread out over the course of 18 years could grow to over 100K.

If you invest that 54K all at once when your kid is born and let it grow for 18 years, that initial investment could grow to over $182,000.

Again, compound interest.

Glorious.

The eighth wonder of the world.

And one more thing on 529s, you're not locked into your own state's plan.

Your state might offer a tax deduction for in-state contributions, which is definitely worth checking.

But if your state does not, you can absolutely shop around nationally.

Plans from Utah, Nevada, and Ohio consistently rank among the lowest cost, best performing plans in the country.

You can use a 529 plan from any state, but if you use your home state's plan, you might get some extra tax perks.

So definitely treat it like any other investment decision and shop around.

Here's the second account I opened for my daughter, a custodial brokerage.

This one is different in feel and in function.