I would suggest investing in a Roth IRA.
First of all, the FAFSA (the form you fill out to determine if you get
Federal Financial Aid for college) doesn't consider Roth IRAs as an asset. Some colleges might, though, as the following article points out.
Roth IRAs and Financial Aid - Kiplinger.com
Here is another article about financial aid...this one points out that state schools generally use the federal formula, while private schools might not:
Roth IRA - not a great gift for a 16-year-old? « Student Loan Info for Parents
But one thing that I think this author is missing is that if you invest $4000 in a Roth IRA and even if that gets counted as an asset, the formulas don't expect you to cash the whole thing in to pay for college. As the first article says, maybe 25%. So, you would have to come up with $1000.
The great part of the Roth is that that you can take money out of it at any time, including to pay for college...up to what you put in. If you put in $4000 this year and $2000 next year, and you then need to pay for college, but the account is now worth $7500 (because the stocks went up), you can take out $6000 any time and not pay a penalty on it.
Maybe look at my blog to see a little more about beginning investing...
Beginning Investing: Cptacek's Personal Finance Blog