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Are Savings Bond still the way to go for children? Something Better?

LineSkiCat14

LineSkiCat14

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I have two young ones in my life and one is turning 3 next week. Kids these days just get an endless amount of gifts, toys, and gadgets, and they only use them for 2 weeks anyways. I'll always get them something fun, but would rather take part of the money towards the gift and start building it into something better for when they are 18.

Are these still the way to go for someone of that age? Is there something better? I spoke with the parents, they said I could always just put it into their college fund (I imagine mostly stocks due to their age). Maybe that's better.

As always.. good answers and funny answers.
 
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BBdK

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PTI (pti) said:
the difference in interest between savings bonds and burying the money in the back yard is, what, about 0.1%?

id bury it in the back yard, personally.
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I thought OP was joking.

I got jacked up to cash my $500 or whatever in multiple savings bonds that were 16-18 years old when I went to college. IIRC, I pocketed $508. Boom.

Unless you're UKO, savings bonds are a joke. Definitely recommend a CD instead. You'll have an extra $5-$20 easy in that amount of time. $30 if you use a Credit Union, there are some "specials" running right now that you do not want to miss.
 
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LineSkiCat14

LineSkiCat14

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Nope. I was not. I've never had to look into savings bonds... ever. I always remember other kids getting them back in the 90's.

That's why I'm asking...

The 529 sounds good, but I think their parents already have this setup. I take it there really isn't much else for something like this...
 
funKYcat75

funKYcat75

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Just keep throwing cash at them and be the cool uncle/grandpa/whatever you are.
 
AustinTXCat

AustinTXCat

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LineSkiCat14 said:
I have two young ones in my life and one is turning 3 next week. Kids these days just get an endless amount of gifts, toys, and gadgets, and they only use them for 2 weeks anyways. I'll always get them something fun, but would rather take part of the money towards the gift and start building it into something better for when they are 18.

Are these still the way to go for someone of that age? Is there something better? I spoke with the parents, they said I could always just put it into their college fund (I imagine mostly stocks due to their age). Maybe that's better.

As always.. good answers and funny answers.
Click to expand...
I'll start throwing out ideas based on my experiences as a tightwad investor. After my daughter was born, I began investing for her future. The very first investment I made was an amount of $100 in the Dupree Kentucky Tax Free Income Series (KYFTX). Managed since 1979 by Dupree & Co in Lexington, the fund invests in tax-free bonds, some of which finance the University of Kentucky. For me, it was more of a sentimental thing rather than about performance. I made the first investment in 1992 and the last in 1997 for a total of $1,200. The fund was worth over $2,500 when my daughter began withdrawing in 2010.

Advantages: Low initial investment. No mandatory automatic investments. No UGMA/UTMA-related tax headaches. Huge sentimental value. Each additional optional investment cost just $100.

Disadvantages: Low rate of return. Investment merely doubled over an 18 year period

Dupree offers other products with higher return rates. If you go the investment route outside of plans, keep max yearly incomes in mind. After $500 of investment income, custodian is liable for taxes.

I'll submit other ideas out there later. Must prepare for work.
 
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AustinTXCat

AustinTXCat

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Buy shares of stock in well-established companies. Couple methods:

1. Sharebuilder, which is now called Capital One Investing.

2. Consider Direct Stock Purchase Plans/Dividend Reinvestment Plans (DRiPs), such as those available through American Stock Transfer and Trust Co. or Computershare. Numerous options are out there. Also please check this list. Between '93-'99, I invested $1,500 in ATMOS Energy (formerly United Peoples Gas) for my daughter in $25-$50 amounts. It grew to $10,400 when she began withdrawing last year.

Consider only quality companies. When it comes to investing for young children, time is on your side.
 
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EWreddevil

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I currently invest with Dupree Mutual Funds, and I also have been very pleased as they are a great bond family and are federal and state tax free. One correction is that after your initial deposit of at least $100, any other deposit can be any amount (not just $100 or greater)
 
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AustinTXCat

AustinTXCat

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edubbs said:
I currently invest with Dupree Mutual Funds, and I also have been very pleased as they are a great bond family and are federal and state tax free. One correction is that after your initial deposit of at least $100, any other deposit can be any amount (not just $100 or greater)
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Great info. That $100 additional investment amount back in the day proved annoying, especially when I only set aside $50/month.

Cool little Dupree & Co fact: Although now based out of Lexington, the firm originated in Harlan.

A very nice employee named "Terry" assisted me via snail mail in 1992 when I first opened my daughter's account. Fast forward to 2010, Terry assisted my daughter and I over the phone when we transferred ownership from a custodial account to sole ownership. Ha ha, she remembered when the account was created and also corresponding with me while in Germany.
 
LineSkiCat14

LineSkiCat14

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Great answers Austin. Really appreciate it. FWIW, these are actually my half brothers, my Dad remarried and now I have two little brothers who could be my kids (which is totally awesome, btw).

I'm not a great investor, so something that I can sock money away into with little maintenance. I get that this probably means not as much of a return down the line, but better than me effing it up.
 
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AustinTXCat

AustinTXCat

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You might also look at a few select mutual funds. Some are offered with low initial minimums and no minimums for additional investments.
 
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blueboy08

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I have two half sisters from when my dad remarried a woman roughly my age, who are 24 and 21 years younger than me, respectively. I put $500 for each of them in a stock account when they were born and add to it each year for their birthday and Christmas.

I don't have it in custodial accounts, because I don't want them to know that it is there (or for my ex-stepmom to get ahold of it). I deal with the taxes and everything and will use it to either help them with college, pay for a study abroad, or help with the downpayment on a home when they are old enough.
 
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LineSkiCat14

LineSkiCat14

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That sounds like the smartest idea. Sounds like you can really grow it over time, but also keep it protected from the step parent. I mean, who trusts their stepmom anyways??

Just for reference, I'm 28 with a 27-year span difference. So crazy. But yours are girls, and while I'm sure you adore them, I don't know if I could deal with watching over two little sisters. :eek:. So, you win. Ha.
 
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blueboy08

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Yeah, I figured my dad will probably dead or in a nursing time by the time are they are in their 20's (he will be in his 60-70s), so I wanted to be sure they had something to help them out if that is the case. And to be the cool older brother than looks out for them feels good.
 
LineSkiCat14

LineSkiCat14

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I think I'm gonna go with that 529 actually. I do all my investments through Fidelity (both of my last employers used them). Probably a dumb question, but can I just call up my rep and have him start a 529? What do I need (I imagine the kids SSNs and names)? And if it's essentially just an investment portfolio, I imagine being VERY aggressive is the way to go?
 
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d2atTech

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LineSkiCat14 said:
I think I'm gonna go with that 529 actually. I do all my investments through Fidelity (both of my last employers used them). Probably a dumb question, but can I just call up my rep and have him start a 529? What do I need (I imagine the kids SSNs and names)? And if it's essentially just an investment portfolio, I imagine being VERY aggressive is the way to go?
Click to expand...

no need to 529 if they become scholarship athletes, however. just invest in sports equipment.
 
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robh1975

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Stock Market. When my son turned 4, I convinced my wife to let me take out his $803 in his savings account and invest in the stock market. 3 years later it is worth $2200. We add money to his account/ purchase additional stocks when his piggy bank gets full or gets birthday money.
 
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AustinTXCat

AustinTXCat

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LineSkiCat14 said:
I think I'm gonna go with that 529 actually. I do all my investments through Fidelity (both of my last employers used them). Probably a dumb question, but can I just call up my rep and have him start a 529? What do I need (I imagine the kids SSNs and names)? And if it's essentially just an investment portfolio, I imagine being VERY aggressive is the way to go?
Click to expand...
When the children are young, time is on your side. Definitely get aggressive with the investments. Begin moderating as both parties age.
 
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Tinker Dan

Tinker Dan

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Mt. Dew and Pixie sticks.... lots of them.... People will throw money at them to get them to go away.

Cussing Jar.... my daughter is in college now and still talks about all the money she made off of that thing. Seriously..... But, I was a career Sailor and so was my wife and all of our friends. The kid might have had a slight advantage going in.

I like index mutual funds.
 
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UKserialkiller

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UK_Norm said:
Invest in Nerium, Advocare, and Zija. That investment will make the kiddos millionaires by the time they are adults.
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Yeah, it may be high risk, but the pay-off is killer.

Technically, these are investments where your children can learn how to market products to the public at a very early age. Why not better develop their skills through these type of ventures? This is what I don't understand about kids. They will go market other people's **** for a company's profit, but none of the money goes back to the kids. Boy Scouts, Girl Scout cookies etc etc. Lemonade stands don't cut it anymore. They're outdated like newspapers.

Best way is through Nerium, Advocare, Zija, Herbalife, Monavie. Killing two birds with one stone, to be cliched.
 
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