I want to open some sort of Cd account for my son. I want it to be something he (or I) can't get into until he is 18. When he is 5, I want to open it with $1500 and deposit an additional $1000 or more every year. Any suggestions as to a good way to achieve this.
2006-08-25 08:00:37 · 13 answers · asked by Momin2005 1 in Business & Finance ➔ Personal Finance
I want to deposit it into somethign that has a good interest rate.
2006-08-25 08:08:22 · update #1
If this is a college savings fund you'll want to look at a ROTH IRA... this way you can earn FAR MORE than a CD and pay no taxes or penalties if you the money is used for continuing education or a first home purchase.
Slainte,
-D
2006-08-25 08:05:52 · answer #1 · answered by chicagodan1974 4 · 0⤊ 0⤋
Open a Roth IRA and deposit the money in a no-load mutual fund. DON'T do a 529 - who knows if your son will even GO to college? What if he goes into the military and gets his college education fully paid for?
With a Roth, you can withdrawal the principle (what you put in) at any time (no waiting) for any reason. However, if you take out the earnings, you will pay income tax on that. Really, it's a glorified savings account - with a MUCH better interest rate.
2006-08-25 20:37:04 · answer #2 · answered by homeschoolmom 5 · 0⤊ 0⤋
Since this is a long term investment I agree a mutual fund would be better than a cd. Ask around for some good financial advisors in you area. If the money is for college an ESA or 529 plan would be good. If you just want to help him out w/some funds then an UTMA would be appropriate. Unless you son has earned income he cannot open a Roth. Since he is 5, I doubt he is earning much.
2006-08-25 15:29:06 · answer #3 · answered by money 2 · 0⤊ 0⤋
Start with a christmas club and take your son to the bank every week and together deposit 10 dollars,this will help get your son in the habit of saving and teach him how money will grow over time.After you recieve the check at christmas time reinvest this money in a certifacate of deposit and then repeat the process.In a few years then you can start investing in stocks,as an example you could buy a small amount of the electric company and then enroll in the dividend purchase program where they just keep reinvesting the dividends and you can make small additional purchases.
2006-08-25 16:33:28 · answer #4 · answered by Anonymous · 0⤊ 0⤋
Have your work direct deposit 100$ every two weeks into an ING account. It is a Pain to get the money out of the account once it is in and the interest rate right now is 4.35.
Just forget it is there and you will learn to live without it
2006-08-25 15:06:46 · answer #5 · answered by billyandgaby 7 · 0⤊ 0⤋
If for college a 529 plan. Or a Roth IRA (which can only be used for some things like first home and college expenses) You could try a CD which will charge fees if you take the money out early.
2006-08-28 18:44:06 · answer #6 · answered by Ren 2 · 0⤊ 0⤋
Well, since he will have a long time for this to grow before he needs to access it, I would recommend opening a brokerage account and investing the money into a target retirement account. Yes, these are typically used for retirement planning, but they are also good for other long-term goals because they become more conservative as the goal date approaches. Alternatively, you can look at bonds which are state tax free and can be federal tax free if used for higher education.
One thing, please make sure that you are maxing out all of your retirement options (401k & IRA) before you start saving for your son. He will be able to get school loans and make money as he gets older but you won't be able to get loans when you are in retirement.
Good luck!
2006-08-26 17:45:21 · answer #7 · answered by personal_finance_101 3 · 0⤊ 0⤋
Your nest choice is a Roth. The funds can be withdrawn for college & other expenses. Most don't realize this, but you can withdraw your original investment any time afterr 5 years if needed, wihtout penalty...Check into a Roth, it is by far the best alternative.
2006-08-25 15:37:16 · answer #8 · answered by chh945s 2 · 0⤊ 0⤋
all the answers you have now on line are right and great, but have you taken into account that one day and we don't knew when , that you may have to leave that beautiful child you brought into this world,for another to raise,take that into account also when you decide to open his account with a bank.find you a bank and ask questions lots and lots of question, about what ifs, and should, and what if i can't, and what if this should happen to me. can they are she are he do this are this? find someone you can truly, truly trust with your son future, his livelihood,and put them into the planning for your son future. GOD BLESS
2006-08-25 15:31:32 · answer #9 · answered by Anonymous · 0⤊ 0⤋
You can look into colledge saving account. What they called 519 or 529?
2006-08-25 15:09:27 · answer #10 · answered by TZ 2 · 0⤊ 0⤋