I pay my parents $1,000 a month to babysit but they spend it on toys. Should I invest it for them instead?

A scenario involves paying a retired parent $800 to $1,000 per month to watch toddlers instead of using daycare. The parent feels uncomfortable accepting the money and spends it on toys and clothes the children do not need, creating a financial wash. A proposed solution uses a joint brokerage account controlled by the adult child, funded by the babysitting payments and invested conservatively for the parent’s benefit. With $1,000 monthly contributions, conservative returns can grow the balance to about $69,000 after five years and about $164,000 after ten years at 6%. At 4%, it can still reach about $66,000 after five years, while cash spent on toys produces no assets.

"It might not grow to a ton of money over the next 2, 3, 4, 5, 6 years, but it's definitely going to be better than them wasting it on toys and clothes because she feels guilty taking the money from you."

"His fix is a joint brokerage account that the adult child controls, funded by the babysitting payments and invested conservatively for the parents' benefit."

"Run the numbers on $1,000 a month. At a 6% average return, which is reasonable for a conservative blend of short-term Treasuries, investment-grade bonds, and broad equity index funds, $1,000 invested monthly grows to roughly $69,000 after five years and around $164,000 after ten. Push the assumption to 7% and ten years lands closer to $173,000. Pull it back to 4%, the kind of yield you can get today from a money market fund, and five years still produces about $66,000."

"Compare that to the alternative. The same $12,000 a year handed over and spent on toys produces zero financial assets. The kids outgrow the toys in 18 months. The parents have nothing to show for the labor they provided."

Read at 24/7 Wall St.