I disagree that money in savings is an investment, for the reason that Steve said, you lose money on your so called investment when inflation is higher than your interest rate. Generally, it's going to be a wash in the long term.
If you're nervous about losing your money, look into a good money market mutual fund. Or go with long term, established mutual funds. DW and I are actually up about 12% in the last 12 months, following Dave Ramsey's investment style, with a good broker.
As far as the kids are concerned, put it into a good ESA that's in growth stock mutual funds. You can only put $2,000 a year per kid in these, and it will cover a state school, not ivy league. If you've got bigger aspirations, have the kid get a job, and then you can open a Roth in their name and fund it up to 100% of the income they made. I.E - you pay the kid the money out of pocket. You then can withdraw all of the principal when they reach college age. By doing this, you're essentially using it as a savings account, but giving yourself the possibility of a much higher interest rate.
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