Which Records to Toss

Kiplinger's Personal Finance Magazine, Feb, 1999 by Kimberly Lankford, Sean O'Neill, Margaret Ringer

ROTH IRAS FOR KIDS

My son is 14 and has a part-time job. I tried to open a Roth IRA for him, but Fidelity wouldn't do it because he is a minor. Do you know of any mutual fund companies that will let him invest in a Roth IRA?

--CHUCK WUNSCH, Pinehurst, N.C.

Of the 20 largest no-load mutual fund companies, 12 let kids open Roth IRAs. Many fund companies put the kibosh on kid Roths because they're worried about being able to enforce a contract with a minor. As with most IRAs, kids can contribute earned income (from babysitting, delivering papers or any other legitimate job) up to $2,000 per year. The tax law also stipulates that single taxpayers must earn less than $110,000 to qualify for a Roth (that knocks out the Hansons).

Funds that allow kid Roths may charge a lower minimum if your child invests an equal amount each month.

TIME SHARES WITH A TWIST

While I was on vacation in Florida, I talked with both Disney and Marriott about signing up for their vacation clubs. Aren't these clubs just time shares in disguise?

--ROGER LACY, West Chester, Pa.

They're a lot like time shares, but they're more flexible. You pay a lump sum up front, which buys you time at a vacation spot for several decades or even forever. At Marriott, a deed for one week costs from $8,900 to $45,000, depending on the size of the accommodations, the location and the season. For example, a two-bedroom apartment at Marriott's Grande Vista, in Orlando, during peak season costs about $16,300. Disney's time shares range from $9,413 to $125,500. A deed to a two-bedroom apartment with a good view at Disney's Board-Walk Villas, in Orlando, costs about $22,000 and can be used most summer weeks until 2042. Disney and Marriott also charge an extra $400 to $600 per year in maintenance fees.

If you want a change of scenery, Marriott lets you trade among its 38 properties in 18 locations throughout the world and among non-Marriott time shares throughout the Interval International network. Every two years, you can exchange your time for points to use at Marriott hotels or for cruises, airline tickets and rental cars.

Disney gives you a set number of points each year that you can use at its four resorts or on other Disney vacations. For example, the $22,000 two-bedroom apartment at Board-Walk Villas translates into 350 points. That would buy you, say, a three-day Disney Line cruise for two adults and one child, staying in a deluxe stateroom with a veranda, and you would still have points left over. Disney members can also trade their points through interval International.

Marriott's and Disney's properties get high marks for quality, but don't approach them as a real estate investment. Resale values are better than for most time shares--which often resell for only 50 cents on the dollar--but you'll almost always get back less than your initial outlay.

WHERE TO FIND KID-FRIENDLY ROTHS

FUND                 MIN.    PHONE FOR
COMPANY              INV.    PROSPECTUS

Baron              $2,000   800-992-2766
Dodge & Cox         1,000   800-621-3979
Invesco               250   800-525-8085
Janus                 500   800-525-8983
Neuberger             250   800-877-9700
  Berman
PBHG                2,000   800-433-0051
T. Rowe Price       1,000   800-638-5660
Strong                250   800-368-1030
SteinRoe              500   800-338-2550
USAA                  250   800-531-8722
Vanguard            1,000   800-635-1511
Warburg Pincus        500   800-888-6878