Aug
21
What is the best type of savings account to open for a child?
August 21st, 2010 posted by
admin
I am thinking starting a savings or investment account for my 3 year old son. I would start it with $500 and contribute $30 per month into the account. I was thinking of opening up an account on Scottrade and doing long term bonds or opening up a high interst rate savings account. Any suggestions or thoughts on what may be my best options?
zeb6219 says:
August 22nd, 2010 at 8:41 am
Buy a mutual fund that is moderately aggressive for $2,500.00 and just let it sit.
Jessica K says:
August 22nd, 2010 at 6:07 pm
You would get the best rate on a CD. There are some great ones for college savings. I would check some local banks to get some rates.
CommonSense says:
August 22nd, 2010 at 10:27 pm
If you are saving for college you can open a 529 account, where you can invest the money. However the money grows tax-free, whereas you’ll be paying capital-gain taxes on alternatives.
mark says:
August 26th, 2010 at 3:05 am
If this is your money saving for college, then a 529 plan would be best. That way the money is still yours if your kid decides not to go to college. The money accumulates tax free.
If this is his money, some banks have passbook savings for kids (no fees, and small interest accumulation) that are good for teaching about banking. I would not put much in this type of account
leobutterflygoddess says:
August 29th, 2010 at 3:01 am
open an american funds college america account!! : )
jen070480 says:
August 31st, 2010 at 1:20 am
Depends what the money is going to be used for later.
if its for college – open up a 529account so you can get the tax benefits
if its just for him in the future, get the highest interest money market account you can get, invest til you have a substantial amount, then put into a CD. Problem with a CD is you cannot add to it month by month.
You also might want to look into getting bonds. Savings bonds, T bonds etc…
darwinhawaii says:
September 3rd, 2010 at 10:21 am
how about a pension fund that you can pass on too him at 18. Small amounts over 60 years is better than large over 40!
Annie says:
September 6th, 2010 at 11:14 am
Sharebuilder will let you buy stock for a child. This is a great way to start a child’s savings. Scottrade probably has something similiar. You set up your account as a Custodian Account.
The ShareBuilder Custodial Account is an investment account created for the benefit of a minor. Custodial accounts are opened under the Uniform Transfer to Minors Act (UTMA), or the Uniform Gift to Minors Act (UGMA) of your respective state. The minor is the owner of the account and its assets. However, a custodian must manage the account until the minor reaches the age of distribution in accordance with the laws of the state under which the account was established. Earnings (up to a certain amount) will be taxed at the minor’s rate.
Note: State laws may restrict who can open a custodial account. Please consult a financial advisor for additional information on custodial account restrictions and tax reporting questions. Also, there can only be one minor and one custodian for each ShareBuilder custodial account.
On another note, have you looked into a high yield savings or money market account? You can compare rates by state or overall (to include online banks) here:
The best rate near me (Alabama) is 5.36 (APY) at AmTrust. The overall best rate is through Geauga Savings Bank Newbury, OH but you have to have $25,000 to open an account! AmTrust is also the next highest overall bank.
I like the high yield savings / money market account better than a stock plan. Good luck!
FrominatoR says:
September 8th, 2010 at 12:48 pm
etrade.com offers > 5.00% interest on a savings account. FDIC insured.
no volatility like mutual funds, just a savings account as you seek.