Investment for children

[trgowen]

I had my taxes done yesterday and my wife and I are getting a decent amount back. Most of it we are going to put into savings for ourselves (rainy day) but we have talked about wanting to set up some sort of savings fund for our children so when they turn 16 and graduate we will be able to help them out with a car, computer, college, etc.

We likely will be looking at starting with around $250-$500 and my question is what type of savings should we look at. Our children are 16 months and 2 weeks respectively so time is on our side. I didn't know if we should start small with like a CD or what other options are available. We have a Bank of America account and I know their CD's are pretty weak in terms of growth and didn't know if that was the norm or if better options are out there.

Any help is appreciated.

Thanks, and have a great day.

[Slug]

How about a 529 plan for college? It's a great time to start, and you may be able to get a state tax writeoff depending on where you live.

[PrudentSaver]

How about a 529 plan for college? It's a great time to start, and you may be able to get a state tax writeoff depending on where you live.

Would you best be able to summarize the gist of it for me?

[cooliemae]

You might check out this discussion, it concerned saving for children and 529 plans versus mutual funds.

Investing for my daughters

[kv968]

Here's a good link for an explaination of a 529 and the various plans:

529 Plans

[jpg7n16]

Would you best be able to summarize the gist of it for me?

529 shorthand:

Find low cost plan for your state
Gift money in
Take money out for college -- good (completely tax free)
Take money out for anything else -- bad (earnings taxed and penalized)