It depends on your income. If you make less than $200,000 a year household income I think an ESA is a great place to put your money. An ESA (Eduction Savings Account) works like a Roth IRA. You can put up to $2000 a year per child on pre-taxed money. BUT when you take that money out, if you use it for educational expenses (books, tuition, and I *think* maybe dorms too?) then it's not taxed.
Put the money into a mutual fund with a long term track record of averaging at least 10% or better. And yes there are hundreds of them that are like that. You just have to do a little research on it.
If your income is more than $200,000 a year a 529 could be a good option depending on which State you live in. And also the UGMA is another option- the something gift to minors act. I can't remember what the U stands for. Talk to a financial planner for more information.
at 12:28 PM on May. 29, 2011