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What to do with small inheritance
Old 06-25-2016, 07:24 AM
  #1

My two young children inherited small sums of money from their great-grandmother (think under $150 each). I want to put that money someplace for them where it will grow until they are adults, or about college age. Savings accounts are great to keep the money safe, but interest rates are so low that the money won't grow at all. Any ideas? TIA


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Does your state
Old 06-25-2016, 07:29 AM
  #2

have a College Savings Plan? It's a 529 plan. We have one for each of our 2 granddaughters.

http://www.savingforcollege.com/intr...a-529-plan.php

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Old 06-25-2016, 08:44 AM
  #3

Long-term CDs. The longer the term, the higher the interest. As a child, my parents put all of our birthday money into CDs (we complained loudly about not being able to buy toys!). They would put it into a savings account, then starting at around age 8 they would take us to the bank and have us sit at the desk while they transferred it into a CD. We repeated this every time the CD term came due and would add in the money from the savings account. They would have us 'sign' the paper, look at the passbook amount getting bigger, etc. At 18, we each had a nice starting nest egg to access for college expenses.
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Old 06-25-2016, 09:54 AM
  #4

I would say an IRA. It adds more than a savings plan.
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Old 06-25-2016, 10:22 AM
  #5

Quote:
Long-term CDs. The longer the term, the higher the interest. As a child, my parents put all of our birthday money into CDs (we complained loudly about not being able to buy toys!). They would put it into a savings account, then starting at around age 8 they would take us to the bank and have us sit at the desk while they transferred it into a CD. We repeated this every time the CD term came due and would add in the money from the savings account. They would have us 'sign' the paper, look at the passbook amount getting bigger, etc. At 18, we each had a nice starting nest egg to access for college expenses.
This is very similar to what we have done for our kids. All birthday money or money from special occasions like Communion or Graduations, all went into their savings account. When they reached a certain amount, we would get a CD or put it in a money market.
We also bought a bond each month for each child. As they matured we put them in CDs or money markets, too. We had the bonds taken automatically out of our paycheck so we didn't miss the money. I'm not sure if that even exists anymore. As they got part time jobs themselves, they added their own money. It was great to know that they had the money to use toward school, marriage or a car as they became adults.


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Old 06-26-2016, 06:32 AM
  #6

I'm with Freckleface all the way. If you don't like your state's 529 offerings, you can invest in a 529 offered by another state (we did). If your kids were 16 or 17, I might consider a CD option, but if they're in elementary school or younger, I'd put the money into a mix of 529 plan stocks and bonds. They'll earn more over time than they will with the money in CDs that are now paying next to nothing.

As an alternative or an addition to a 529, look at a Coverdell Education Savings Account (formerly known as an education IRA). These are similar to 529s in some ways, but there are some subtle differences.
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Old 06-26-2016, 01:50 PM
  #7

I have considered 529's, but am more comfortable with doing that with my own money on their behalf. I don't like the idea of limiting the ways they can use their own money, if that makes sense.
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