I am curious to know what others are doing to secure their child/children's future? I am trying to save $5,000.00 for each child and invest it wisely. Its not alot but atleast they will have a little something. Any advice about cd's, annuities, etc. is appreciated.
TIA

By Hol on Wednesday, July 12, 2006 - 12:52 am:

We didn't have any spare money when our older DK's were growing up. However, my MIL bought them savings bonds every birthday and Christmas. When they went out on their own, I gave them each their bonds.
We also buy bonds for our grandaughter.
How about a 529 College Fund? Most states have them now, and they are wonderful. My DD and her DH invest in them for Megan through their employers. It's tax deferred until the child uses them. I believe there are restrictions, though. I THINK that they have to be used for education.

By Paulas on Wednesday, July 12, 2006 - 03:59 am:

We invest in RESP (Registed Education Savings Plan). We only put in $40 each every two weeks but the government will add anothe 20%, up to a maximum of $400/year. Every little bit helps.

Our plan allows our children to use it for any type of post secondary education, including trades. If they decide not to persue any futher education, it can be transferred to an RRSP in their name or we can withdraw the money (minus the government portion) and put it in to an RRSP in our name.

By Ginny~moderator on Wednesday, July 12, 2006 - 06:52 am:

I would stay away from annuities. They usually have the lowest return (no matter what the ads say, if you look at the history of an annuity program the return rate is almost always nowhere near what the hype is), and fees can be high because the annuity/insurance company pays a large commission to the broker/agent. Other than that, check out the issues of Consumer Reports that talk about mutual funds - CR generally does one major article a year plus smaller followup articles and examines types of mutual funds and a long list of specific funds.

I don't know any details, but I believe there are some programs, like the RESP that Paula mentions, where the earnings on the account are not taxable at least until the money is withdrawn, and maybe not then if it is used for education. And that the government adds money to it every year which stays in as long as the money is used for educational purposes is a real bonus.

One of the attorneys I work for just bought a house with her fiance. Her grandparents gave her savings bonds for birthday and Christmas every year, and she had a stack of savings bonds to cash in for the downpayment on the house.

By Reds9298 on Wednesday, July 12, 2006 - 07:47 am:

We put a lump sum into a mutual fund when Natalie was born, and are adding at least $1K/year while I'm at home. (Which will be 3 more years). That's about all we can handle while I'm at home. After I go back to work, we will put between $400-$500/month in mutual funds, both low and medium risk. I'm sure at some point we will mix it up and utilize a 529 as well.

(We only have one child and only plan to have one.)

By Annie2 on Wednesday, July 12, 2006 - 08:20 pm:

The best thing we did for our kids was invest most of our savings into the FL prepaid College Fund.
All four will be able to go to a Fl state school or U plus the first year of room/board. If they choose to go out of state the funds and acruid money can be transferred.
If a child dies (God forbid) or decides not to attend college( not our plan), we will get our money refunded plus some dividends back.

All paid. We did this about seven years ago. The price was based on their ages. I hated to write out the check but it will save us tons of money in the long run.

By Reds9298 on Wednesday, July 12, 2006 - 08:49 pm:

Annie- That sounds like a pretty neat deal. We also took a big chunk out of our savings to start Natalie's fund when she was born. Right now it's actually a custodial account in her name, which technically means that whatever is in it ( which won't be anything!) when she turns 21 is hers. Not all of our funds will be custodial, but that's the way we started it.

By Yjja123 on Wednesday, July 12, 2006 - 09:24 pm:

We also have the Florida prepaid college plan. We bought it when the kids were 2 and 1.

By Kym on Friday, July 14, 2006 - 05:11 pm:

We put $700 a month stair stepped where the oldest gets the most and the youngest gets the least into a custodial account, it can be turned into an education account without tax penalty when the time comes.
we are also on the "better get a scholarship" plan And hoping that a couple would like to run family businesses as well!