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Where's a good place to park money for child?

Looking for an investment vehicle that does not charge you a penalty for not using the money for college, or otherwise requires you to use it for college. There's a good chance my kids will want to join the military so they won't need that money for college. Savings accounts have crappy interest rates. So what are my other options?

 
mhaney03

Asked by mhaney03 at 11:58 AM on Mar. 5, 2010 in Money & Work

Level 17 (3,320 Credits)
This question is closed.
Answers (6)
  • Stay away from universal life insurance. Stick with only term life insurance for 20 years or so. You would do better to take the difference in premiums between those two types of policies and investing in a mutual fund or other higher rate of return investment vehicle.
    halfpint_ny

    Answer by halfpint_ny at 10:18 PM on Mar. 5, 2010

  • Are you fully funding your own retirement? If not you shouldn't even worry about putting money away for your children. You can't put money in or leave money to minor children unless it's for educational purposes. That being said you can set up a trust and the trust can be the beneficiary and that money can be designated for your children in the event that you pass away. You can just invest regularly in things like ETFs or no load mutual funds, there are some good bonds out there but you have to be careful so I would go down to your local discount brokerage firm and talk to someone about it.
    Anonymous

    Answer by Anonymous at 12:10 PM on Mar. 5, 2010

  • My mom set up custodial accounts for each of her kids (myself included) at Merrill Lynch. The money went mostly into "safer" stocks and mutual funds. The money did not have a specified purpose - I used some of mine for college and saved the rest. The only downside is that the account is in full control of the kids when they turn 18. If they aren't responsible and know about the money they could take it and blow it on silly stuff. I would have an account for them and just not tell them about it, then when they turn 21 or have a stable enough life you can turn it over and trust that they will do the right thing.
    missanc

    Answer by missanc at 1:00 PM on Mar. 5, 2010

  • I have credit union accounts for my kids. Caution on above statement. If you set up accounts with your kids social security numbers you must tell them when they are required to file tax returns. You can't hide the money from them and end up getting them in trouble for not filing. It iwll be included in their FAFSA statements etc. You really can't hide money.
    Anonymous

    Answer by Anonymous at 1:18 PM on Mar. 5, 2010

  • What about life insurance that builds cash value? How do those perform? What's been your experience with them?
    mhaney03

    Answer by mhaney03 at 1:26 PM on Mar. 5, 2010

  • You can just give it to me. I promise to take good care of it. wink.
    Anonymous

    Answer by Anonymous at 10:35 PM on Mar. 5, 2010

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