Would it be better to set up a bank account or buy U.S. savings bonds for my new grand daughter?
by admin ~ May 3rd, 2007 . Filed under: Investing .
mrscmmckim asked:
I want to do something for her that will help secure her financial future. My health isn’t all that great so I might not be around to see her grow up so I want some way to let her know I care.
I love all the answers and am still undecided but now have about a grand to get started…..putting it to a vote should help me decide.
I want to do something for her that will help secure her financial future. My health isn’t all that great so I might not be around to see her grow up so I want some way to let her know I care.
I love all the answers and am still undecided but now have about a grand to get started…..putting it to a vote should help me decide.
Thanks all!
Clara Tumbleson
May 6th, 2007 at 6:46 am
A very tough question. I think a trust might be better. You can direct funds to her on your death & they can be held in escrow until she is a certain age.
May 7th, 2007 at 2:19 am
The way i see it is; if you set up a bank account the money sits there, unless you are going to deposit money into it every month. Or you can get and Intrest bank account but you have to put in at least a grand or so to get it started and you can’t fall below. I would go with the savings bond just becasuse you can buy a certain amount and let it mature until she is old enough to recieve it. Be sure to check and see what the US intrest rate is though, you want to be able to get as much out of it as possible. If all else fails go see the bank and they can help you out.
May 8th, 2007 at 6:13 am
My opinion is not to buy bonds.
The interest rate is around 3.5%.
Consider buying some stocks in a good company, and set it up to re-invest dividens. Make it a fun company too, so your grand daughter will show some interest in her investment.
Take Disney for example. If you had invested around $2 in a single share of Disney in March, 1986…, it would now be earning over $28.
Buy a US Saving bond for $25 and 20 years later it’s only worth $50.
Doesn’t take a math wizard to figure this one out.
It doesn’t take a fortune to do it either. Contact a few brokers and see what’s available.
May 9th, 2007 at 11:23 pm
treasurydirect.com … simple, effective, inflation protection … she wont have to pay taxes on the money for 30 years and then it is still state tax exempt. currently pays 6.73% and is direct obligation of the US.
and the answer is:::: IBONDS
May 11th, 2007 at 5:20 am
Buy the savings bonds. They mature in the future, and there is a dis-incentive to cash them in early. If they are held to maturity, they are a reasonable investment. The best thing they have going for them is that they are absolutely safe. You should always make a list of them, the serial numbers, in case they are stolen or lost, like in a flood or house fire.
May 13th, 2007 at 6:11 am
Definitely not a bank account. I just looked at all these kids bank account, there are no interest for any amount of money at all. It’s like 0.5% a year. I agree with trado_info, I-Bond is good for now, put away the money, no risk, 18 years later, she withdraw and use it on education, she won’t need to pay any tax on it. My hubby used his savings bond for first installment to buy his first house. If you want to do extra, do buy her some stocks or mutual funds (529), when she is 18 if she wants to be a lawyer or doctor, she will have some money to support her to do so, don’t have to borrow a lot of money. It’s good for her.
May 16th, 2007 at 8:17 am
I suggest you to open a brokerage account in ameritrade.com and invest in the stock market for the long term.
By the time she is going to college she will have enough to go to Harvard.
Drop me a line if you need more detailed information.
May 17th, 2007 at 5:01 pm
I agree with the I-Bond crowd. You can also invest in inflation protected I bonds and hold them in a custodial account. This would mean they are in your name but held in an account for your granddaughter.
Look here for details on how to give Bonds as a gift
I bonds are also inflation indexed so you will always earn slightly above inflation. You can’t get that kind of guarantee with a bank account.
You could set up a trust, but depending on how much money you are talking about the expense of setting up a trust might eat into your gift significantly. If you can trust the childs parents to leave those bonds untouched until your granddaughter needs them for college the bonds are a good way to go.