How to Save Money for Children

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Permalink Reply by Ashley Hunter on March 10, 2011 at 11:32am

just start with a reg savings in all your names. Bring social cards to your bank and birth certs id's etc... You can always get more advanced with it later. For 300.00 you are fine with a reg savings.

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Permalink Reply by Michele Phan on March 10, 2011 at 2:53pm

Hi Hannah,

I recommend that you look into opening an account with ING Direct. ING tends to have better interest rates and you can easily roll funds over to CD's. Also, you can do everything online so there is no need for a trip to the bank.

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Permalink Reply by Ashley Hunter on March 10, 2011 at 3:18pm

yes, an orange savings acct earns you a few more cents a month :) That's what we have too.

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Permalink Reply by Stephanie on March 10, 2011 at 9:51pm

Hannah- Cds are a great short term investment (although rates are a little low right now) So let's say you intested in a 5-year CD at 2% ( I dont know what the rates are right now, Im guessing). But anyways, if the rates go up in 3 years, you are still stuck in that 2% rate).

You can invest in mutual funds (that can be invested in the market and can get a much better return). Mutual funds sometimes have a minimum number of years you need to stay in it before pulling out without penalty. But like I said you can see some great, long-term returns, given you are willing to take a little risk- as the market can fluctuate.

Another option would be to invest the money in a 529 account (college savings account). The money you put in can be used later for college expenses etc, and will accrue interest while waiting)The money can be taken out tax free. But there are limitations here.

Another option are purchasing Bonds.

Check out our OC Mommies Sponsor, Tony Hanlin with Independant Capital. http://www.ocmommies.com/profiles/blogs/saving-for-retirement-and-a

Im sure if you shot him an email and asked the best route to taken, he would get you started on the right foot

 

 

Also, we have an OC Mommies sponsor

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Permalink Reply by Nicole G. on March 12, 2011 at 9:11am

Hannah - We are really overdue in opening one or more of the things Stephanie suggested above, but in the mean time, we have a savings account for Kevin that is in my name, but "In Trust For" Kevin. So I have full access to the account but if something were to happen to me, the money would still be there for Kevin. It started as a safe place for the money he got for his Christening until we did something with it. This is a great reminder that we still need to do that. ;)

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Permalink Reply by Reba on March 20, 2011 at 7:33pm

Hi Hannah,

 

Another option is a life insurance policy for the child. We had been putting money aside for our daughter starting when she was born (also in an ING account actually), and then when we finally got a chance to talk to a financial advisor, he suggested an insurance policy for her. It is incredibly inexpensive when they're young, so if you decide to pay a set amount, the amount over the cost of insurance is just yours to withdraw. Let's say the insurance is $10/month, if you put $40 a month in, the $30 will grow like an investment but you can pull it out whenever you want for whatever you want. Plus, the account pays dividends (depending on the company - we went with Northwestern Mutual). The best part is that while it grows similar to a 529, you don't have the restrictions as to withdrawing the money for college expenses... if, say, your little one gets a full scholarship somewhere... or becomes a professional athlete at 11 ;) Plus, the cost of the insurance will never increase as long as you pay the premium - so you locked in the rates for a newborn or toddler for life. I think 529 may be tax free though, this isn't.

 

I'm sure an advisor could explain it better and in more detail, but I was surprised it was even an option. 

Reba

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Permalink Reply by Hannah on March 20, 2011 at 8:15pm

Thank you all for the wonderful advice! Didn't even know about some of the options that are out there... will do my research on each one and figure something out for us.

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Permalink Reply by Mary Stewart Oliver on March 27, 2011 at 8:20am

Hi Hannah,

 

Have you looked into 529 education accounts.  We also got money for Keeley that was earmarked for her college fund.  We already had accounts and financial advisor through Schwab, so we contacted him and he sent us a packet on the different types of accounts.

We ended up doing the account for college education, but they have options for private schools as well and simple trusts.  Also, Schwab accounts have still performed reasonably well in the current economic climate.

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