The Birthday Gift That Compounds

We opened a 529 on a whim. Twenty-five months later, the balance is five figures and growing

(This is a stock photo, not our daughter)

When our daughter was born, we opened a 529 plan. In short, it is an account where you invest money for your kids and all the gains are tax-free when they use it for college. We seeded it with a few hundred dollars and moved on. No grand strategy behind it.

Shortly before her first birthday, we packed up and left town. We do not like birthday parties and all the drama that comes with them: the clutter, the consumerism, the obligatory everything.

Then family started calling. When was the party? What gifts would make most sense for our daughter’s first birthday? We said we are out of town, no need for any gifts, thank you. People insisted. They wanted to send money and asked for our bank accounts.

We were not comfortable keeping money meant for our daughter in our bank accounts. We would probably spend it, and we did not want to spend money that was meant for our child. Then we thought: why not give them her 529 link? So we did.

The gifts kept coming. Between $50 and $200 each. But a lot of them, far more than we expected. Aunts, uncles, grandparents, family friends. What started as a way to dodge clutter turned into a growing investment account funded by the people who love our daughter.

We just checked. Twenty-five months in, the balance is five figures. Compounding did that. If we keep topping it up with a few hundred dollars a month, it will be over half a million by the time she turns 18.

Our daughter does not know any of this yet.