Kids Savings Accounts?

[onewhippedpuppy]

I'm looking for a good account to set up for each one of my kids, not with any real purpose other than money to help them get started in adult life. There's a number of college funds, CDs, bonds, and regular savings accounts, but they're all just crap. This would be something that received regular contributions, not a lump sum up front sort of account. Any suggestions for something long-term that yields ok interest without being too much risk? I'm not expecting 15%, but I'd like better than a 0.1% savings account. The oldest kid is 7, so I have quite a few years for growth.

[MotoSook]

Teach them how to invest themselves. Choose some low risk stocks and teach them to research and learn. Gains and losses with the small amount will be valuable in life.

[jcommin]

I'm all for saving. But it is a balance. If your child applies-for a loan, assets are looked at, So if they have savings, the loan amount may be affected by their assets.

Unfortunately it is a game and I would talk to someone who can advise you. I am big on the 529 plans. it is essentially a good way to launder money.

Get some professional help.

[porsche4life]

Originally Posted by Soukus

Teach them how to invest themselves. Choose some low risk stocks and teach them to research and learn. Gains and losses with the small amount will be valuable in life.

His kids are like 7 and 4. They are a bit young to start learning stocks...

[slodave]

Originally Posted by porsche4life

His kids are like 7 and 4. They are a bit young to start learning stocks...

Not at 7! I was working the market by then, thanks to my Grandmother.

[MotoSook]

His income when his kids apply for college financial aid will be the major factor. 529 plan isn't any more than a 401K with post-tax dollars. Only advantage is it can be withdrawn for education... even so. The kids van learn to manage their money with a 529 plan....just another investment.

Federal backed school loans are cheap. My kids will get scholarships or they will get loans. They have to have a stake in their success. I will help a little but I will not allow them to waste my money on an unmarketable degree.

[MotoSook]

Originally Posted by porsche4life

His kids are like 7 and 4. They are a bit young to start learning stocks...

No. They can buy stock in companies they recognize. Toy and media companies. Kids are never too young to learn anything....they are the best at learning.

[Hugh R]

Originally Posted by porsche4life

His kids are like 7 and 4. They are a bit young to start learning stocks...

Not at all, don't you see the e-trade TV ads with the toddler!!

[masraum]

I've never used it, but I've heard that this is a decent way to do it slowly with small amounts.

[onewhippedpuppy]

Guys, I'm not looking for my 7, 4, and 1 year old to start playing the market. Good suggestions, but frankly I don't even play the market. This is intended to be a savings account that we can periodically deposit money into, as well as the grandparents making contributions for birthdays/Christmas. I'd like to get better interest than a typical savings account, but think that level of simplicity.

[MotoSook]

You won't fine anything that simple that pays anything more than CDs, and that's almost nothing. A 529 plan...that is playing the market...just more passive.

[MotoSook]

Most college pre-paid programs (maybe all of them now) are not worth it unless you have to cash to pay for al of it upfront. Otherwise it is just a mortgage for he sum of four yous tuition at a rate they determine based on bonds and how much you van pay upfront (your down payment). Opportunity cost should be considered. Besides this is probably not what you are looking for since it sounds like you are starting with a small amount.

You're better to just use the money you were going to save for them to pay down debt if you have any and get a loan for college. Simply run the net cost (now and later) and you'll see that saving for college isn't always so simple nor worth it if you have other expenses.

[porsche4life]

Screw college savings plans.... Make the little farts get good grades, and they won't have to pay for college. In fact, I made about $1500/semester my first year on scholarships....

[VincentVega]

I'd like to get better interest than a typical savings account

No risk tolerance at all? Not much return but it's insured and safe. Pick one, MMA Rates by Bankrate.com

I like the 529 idea, assuming you are saving for education. State rules vary, but you should have lots of choices on investment's in the account. 529 isnt an investment, really just an account classification.

Take on some risk in a balanced fund? Check out VGSTX. I started buying when I was 18, it's cheap to start and fees are low. 18 yrs later it's grown to a nice little sum.

[masraum]

Yep, what Vincent said, find a good credit union and get a money market savings account.

[LeeH]

Originally Posted by onewhippedpuppy

I'd like to get better interest than a typical savings account, but think that level of simplicity.

Wouldn't we all.

Giving them a lump sum when they're older is fine, but if you want to give them a real gift, teach them how to handle money. Read a book called The First National Bank of Dad.

We started using the techniques in the book several years ago. It's really worked well for us. I'm very happy with my 11 year old's attitude toward money and her spending habits.

[onewhippedpuppy]

Originally Posted by onewhippedpuppy

I'm looking for a good account to set up for each one of my kids, not with any real purpose other than money to help them get started in adult life. There's a number of college funds, CDs, bonds, and regular savings accounts, but they're all just crap. This would be something that received regular contributions, not a lump sum up front sort of account. Any suggestions for something long-term that yields ok interest without being too much risk? I'm not expecting 15%, but I'd like better than a 0.1% savings account. The oldest kid is 7, so I have quite a few years for growth.

Lets reset this here guys. I'm not looking for a college fund. I don't have any debt to pay down except my house, and that's totally irrelevant here. I appreciate and agree with many of the parenting tips here, but it's not really what I was looking for. I just want something better than a savings account to regularly contribute to that will help my kids get started in life. Maybe I'm dreaming here and just need to go with a money market account, I just wanted to insure that I wasn't missing anything.

[KFC911]

Matt, have you considered setting up a DRIP in a stock that your kids can "relate to"...say something like a MCD (that offers a decent yield)? Just throwing out my .02542 worth of advice

[onewhippedpuppy]

I like the ideas with stocks, but frankly I'd like to get enough set aside in conventional savings before I start playing that game. I believe you don't invest money in the stock market that you can't afford to lose, and right now I'm not flush enough with cash that I can afford to take that risk with my kids.

For what it's worth, the biggest funding source for these accounts will probably be the grandparents making a deposit for Christmas and birthdays. We're emphasizing saving for the future vs a house full of worthless toys.

[Seahawk]

Originally Posted by onewhippedpuppy

Maybe I'm dreaming here and just need to go with a money market account, I just wanted to insure that I wasn't missing anything.

We did the MM savings account for each child through Navy Federal.

We started each child when they could grasp what the whole point of the exercise really is: to teach them how to save, the power of compound interest, etc.

Eight years-old seemed to make sense. I won't bore you with the details, but we made sure they opened the monthly statement and we went through it with them.

Great concept and one that worked for us, sort of: My son is a profligate saver, my daughter sees interest as income to be spent. The delta is amazing.