Small Inheritance

[Jessicapea]

Each of my three children, aged 6 and under, received $1,000.00 from my husband's grandmother in inheritance. My eldest received two 30 year bonds and a couple hundred. The other two received cash to make it even between the three. My husband and I have been discussing it but we are not quite sure what is going to be the best way to invest it to make sure we start our children out with a nice savings.

Any advice or suggestions would be greatly appreciated. We do not always make the best financial decisions for ourselves but we want to be sure we make the best for our children. Thank you!

[Petunia 100]

When my kiddos were little, I got their investment accounts started with Vanguard STAR (minimum 1k) and Pax World Balanced (minimum $250) mutual funds. Both are balanced funds, meaning they hold both stocks and bonds. Both are no-load funds, meaning you do not pay any sales commissions.

https://personal.vanguard.com/us/funds/snapshot?FundId=0056&FundIntExt=INT

http://www.paxworld.com/advisors/investment-strategies/pax-world-mutual-funds/balanced-fund

Another option (which did not exist back then) is a Betterment account (minimum $.01).

https://www.betterment.com/

If I were getting my kiddos started today, I would choose the Betterment account, because it uses index investing. Over time, index investing is a better bet than active management.

[snafu]

Similarly to Petunia, we opened 'custodial' low cost mutual funds for our DSs. We made it a point to make small monthly payment and added any money they were gifted by grandparents and relatives. Over 18 years we adjusted allocations and standards of risk. Those tiny sums compounded over the years to substantial amounts that covered a major percentage of their college/university costs. Could you free up the tax reduction equivalent for each child, each year for example? The point is to choose a low cost, low fee investment so the children benefit without losing much to the salesman. What is the interest rate on the bond compared to current interest rate investment?

[MakeAStash]

If saving for higher education is of interest, consider opening a 529 plan. It provides tax free growth of the investments.