I want to start an account for my nieces that I can contribute to on birthdays and holidays. Would Treasury bonds be good? What else? I need a better interest rate than a savings account provides.
2006-11-02 03:31:35 · 5 answers · asked by Mizati 2 in Business & Finance ➔ Personal Finance
It would depend on what you're gifting it to them for...
If you're saving for their college expenses, the 529 plan would be ideal. The money will grow tax deferred, and the growth will not be taxed to them, if they use it for college expenses. However, this becomes a bad investment if that money is not used towards college. You'll pay all sorts of penalities on it.
You could set up a or Uniform Gift to Minors Account (UGMA). This money will grow tax-deferred as well, but the child will owe taxes on the amount when they reach the age of majority in the state they reside (usually 18 or 21). The drawback here is that once the child reaches the age of majority, that money is 100% theirs, and the custodian on the account (you), has no say as to whether or not they use it for education or to buy a new car.
If you have any further questions, you should contact a financial professional.
2006-11-02 07:44:57 · answer #1 · answered by Mike B 1 · 0⤊ 1⤋
UPDATED###
I wouldnt buy gold because the price is high right now -- if youre going to invest in commodities wait until investors have sold short. You could buy a CD, or open a money market account with little risk, -- basically the type of investment vehicle depends on how much risk you want for the money. You might try an ETF or an Index fund, with slightly higer risk. You can open a money market account though at almost any bank or investment firm. I would recommend e*trade or washington mutual. Vanguard is expensive -- they want you to throw a lot of money at them up front.. the 529 program for college savings these folks keep talking about may not apply to you because these are not YOUR kids. Big difference here. You don't get tax credits/deferment for someone else's kids, even if they are your nieces. And boy it's gonna start getting more complicated and involved than you have time for. Start out simple and teach them about investing their money. Better to teach them to fish than bringing the fish to them, -- so many college kids dont no jack squat about money -- one of my friends didnt even know how to use an ATM card properly. Youd be doing them a wolrd of service by simply educating them about finances.
2006-11-02 03:42:02 · answer #2 · answered by MM 5 · 0⤊ 0⤋
Treasury bonds are not good. I would start a 529 college savings plan for both and have the money invested in an S&P Exchange Traded Fund (ETF) or Total Stock Market Index fund. Vanguard is good because they have very low expenses.
2006-11-02 06:21:15 · answer #3 · answered by Steve R 6 · 0⤊ 1⤋
Assuming there will be many years before the money is needed I would look at something along the lines of the Vanguard Star fund. This is a fund of funds that is 60% equity and 40%fixed income. It has a good average annual return and since it is a balanced fund you don't have to manage the mix the fund manager does it for you.
2006-11-02 04:06:23 · answer #4 · answered by waggy_33 6 · 0⤊ 1⤋
young age means there is sufficient time you can keep ur amount blocked...Investment in Mutual fund have no alternative if you are long term perspective...plus we see that commodity and forex are also good angle to invest in...Buy GOLD for the long term bcos it is the best commodity everybody want to have in the time of uncertainity and will leverage your equity risk too..
Identify currancy of some best performing country.. for long term euro is the one i like
2006-11-02 03:38:29 · answer #5 · answered by Hitu 1 · 0⤊ 1⤋