Investment accounts for child (and tax implications)

yoga

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I want to start a regular investment account for my newborn daughter, and am seeking advice on the correct way to go about it.

This same general question has been asked in many threads on this board already, but most threads tend to focus on the types of investments to do, etc. I already know how I want to invest. I intend to invest regularly (e.g. every month) in the US stock market. I will use a low-cost online nominee broker.

The purpose of the investment account is two-fold:
1) to save money for my child's 3rd level education (or other needs); and
2) to educate her on stock investing and it's long term benefits.

I intend to buy stocks that I believe will be long term winners, but also will hopefully be relevant to my daughter, so that she might take more interest in owning a small part of the companies that are a part of her life. I am not a trader - I ascribe to the Ben Graham/Warren Buffet school of buying small parts of valuable companies and holding those interests for the long term. That said, there will obviously be times when it makes sense for me to sell some holdings.

My question is this: what is the best/correct way to setup the investment account and how does it work from a tax standpoint? Do brokers typically have some form of special account that is in the name of the child, but can be operated by a parent until the child is 18 years old? If that is the case, I assume that I would have to file a tax return every year for my daughter to track any capital gains/losses. Do capital gains apply to her exactly as they would to an adult (including the annual tax free allowance)?

Or should the account be in my own name? This does not sound right to me as it would mean that purchases/disposals for my daughter would end up mixed up with my own. And I assume that would also open up questions regarding how to pass the investments onto my child without incurring gift tax, inheritance tax, or the ilk.

Advice welcome. Thanks in advance.
 
I just removed mention of specific stock names from my opening post on this thread in case they may be deemed in breach of the posting guidelines.

I hope my query was clear; I am looking for advice on the correct/best way to trade stocks on my daughters behalf, and am not seeking any advice in terms of investing or types of investments.
 
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