How do you invest money for your children?

[firstkid4me]

My MIL sends Emily money for every holiday, asking us to put it aside for her, and I'm curious how others invest it. It's not something that she'd be touching for a long time, so I'm interested in any tips other than just popping it in a savings account for her (something that will yield better results.)

[MaddieMay]

What about a 529 plan for college? (No kids yet, but we're starting one for my SIL.)

[LilMama23]

We are looking into an ING savings account for our DD - they have a pretty good reputation.

[lisalulu]

We have a 529.

[firstkid4me]

Originally Posted by Nicole!

What about a 529 plan for college? (No kids yet, but we're starting one for my SIL.)

Dh and I had discussed putting aside money for college, but we didn't want to put it aside solely for college. My parents put aside money that was only to be used on college for me, but I never got a chance to use it (and then they gave it to my brother when I got married.) We wanted it to be non-specific.

[annekevdbroek]

I put all gift money into a savings account for the kids. Once it hits $1000 (the minimum at our bank to open a CD) I open a CD for them. Each kid has their own account. My plan is to roll the savings that is over $100 each year in Jan or Feb into the CD at renewal time.

Separate from that we have college savings. I see the CD more as money for them to make decisions about when they are older - like for a big trip to Europe or a down payment on a car or house or whatever.

You could do a money market account - they pay a little better than a savigns account. Or buy shares in a mutual fund. Vanguard has a pretty decent website explaning those investment options. The difficult thing about that is there is often a fairly high minimum to get started.

[velochic]

Right now we have dd's savings in a couple of different places. We have about $1500 in a CD that matures in June. Then we have about $500 in a VERY low yield savings account. The reason for the savings account is that we save our pocket change and take it in every few months to be counted and deposited. Nearly all of this $2k has been saved just from pocket change!! (And they say pocket change doesn't add up. )

In June, we are going to invest the money in a Uniform Gifts to Minors Act (UGMA) account with Vanguard mutual funds. As she gets older (she's only 5), I'll teach her more about investing and let her have some say in how the money is invested. I'll keep the low yield savings as a warehouse for counting the change and move the money from it to the Vanguard account.

We've taken care of college already. She has a 529 into which we invested a large sum when she was born. We are actually a little afraid that we may have over-invested in this because the funds are doing so well, so we do not contribute to that monthly.

We've also done some estate planning, but she won't control that until we're dead and gone.

[kijip]

We don't do college savings for a variety of reasons but the gifts we get for our son go into a money market. He can have it when he is old enough to spend it, be it on school or a trip to Africa or a business venture or whatever it is kids will want to buy in 2025.

ETA: that our reasons for not saving for college are primarily based on:

-He may not go to college (unlikely that he would not go, but possible)
-We feel he should pay part of the cost
-We think saving for our retirement is more important
-Our income will peak later on and then if retirement is fully funded, we can contemplate college savings.
-Heck, we are not all the way done with our own educations.

[BookGoddess]

We have a 529 plan for DD and we make monthly automatic contributions. We also put all monetary contributions DD receives into it. DH had to take pretty large student loans (we're still paying off one such loan) to pay for college. I would rather not have DD start her adult life with such a heavy financial burden.

We're also doing some estate planning so that DD will have money later on but of course she gets it when DH and I are gone and we don't have any plans to leave this planet just yet.

[grniys]

We will be doing mutual funds. A CD is also a great idea. I don't really think it's fair that if the child chooses not to go to college the money couldn't be used on that child, so that's why we're not going that route.

[GooeyRN]

We put all money given to her into a regular savings account. For her birthday and Christmas, we buy her a savings bond.

[phathui5]

My grandma bought my brother and I both savings bonds. They had more than doubled in value when I needed to cash them in, so dh and I were able to put half down on our van, making us able to buy a nicer one that will (hopefully) last longer.

[jpudsey]

Keep in Mind any account or 529 or investment in your daughters name will count against her ability to receive financial aid for college. If you decide to invest in anything for her sake put it in your name only, unless you feel really secure that you will have the 100,000$$ for the first undergraduate degree and the second 100,000$$ for her graduate program that she will have afterward.... :P by the time she applys for colleges.
You should call a financial accountant about the pros and cons of investments and such before you put anything in your childs name.

[Jadzia]

A 529 isn't in the child's name. It is in the parent's name, and the parent chooses the beneficiary (which can be changed).

We have a 529 for our son into which we invest $100 a month since he was born. We also put any money from grandparents, etc. It has already grown quite substantially! And all that growth is tax-free earnings since it is in a 529.

[velochic]

Originally Posted by jpudsey

Keep in Mind any account or 529 or investment in your daughters name will count against her ability to receive financial aid for college. If you decide to invest in anything for her sake put it in your name only, unless you feel really secure that you will have the 100,000$$ for the first undergraduate degree and the second 100,000$$ for her graduate program that she will have afterward.... :P by the time she applys for colleges.
You should call a financial accountant about the pros and cons of investments and such before you put anything in your childs name.

You bring up some good points, but your info is a little incorrect. As the pp said, the 529 is considered to be the parent's asset. Expected Family Contribution (EFC) is based on a formula that the government uses to project how much each student should receive each year. But you're right that it's typically better to have the money as part of the parent's portfolio.

I'd also not advise people to contact an accountant about their investments. I'd suggest finding a fee-only financial planner to manage your money, and that's only if you have significant assets (approaching 1 million, IMHO). For most people, a one-time sit down with a financial planner to get them headed in the right direction is probably the better way to go as far as manging your child's money (unless you're estate planning, of course). And yearly advice is probably okay for most people as long as they read and educate themselves about mutual funds, the market, etc. Better yet, there are many funds out there that adjust the asset allocation as the child gets closer to graduation/you get closer to retirement. These are called target funds. If you really want to be hands-off, that's a great way to go. Any fund company would be happy to help you out with that.

But as for simple savings for kids... it's really not worth it to seek advice unless it's estate planning. And then you probably have significant enough assets to already have contacted a financial planner.