One basic fact i would like to share with you is that “It is never too early for children to start saving for their futures”. While this strategy may seem a bit extreme, it is actually quite smart. With college costs on the rise it has never been more critical to start saving as early as possible.
Below are few plans for you child’s future safety that you can think of :
The 529 Plan
The cost of a college education is rising far faster than inflation for many years, and the rate of increase is showing no signs of slowing down . The federal government and the IRS have provided ways for parents to set money aside for college. One of the most powerful is the 529 plan, named for the section of the tax code that created it. With a 529 plan, parents can set money aside for future college costs, and enjoy some significant tax benefits for doing so.
Direct Stock Purchase Plans
Which child wouldn’t love to get a share of Walt Disney or McDonald’s stock for his birthday? With a direct stock purchase plan, parents and grandparents can provide a great gift and a great lesson in the power of capitalism. Many companies offer investors the opportunity to purchase shares directly, without costly brokerage commissions. This makes direct stock purchases a great choice for children, and a great way for those kids to start a lifelong investment habit.
Savings Bonds
Savings bonds are the ultimate investment in the future, both the future of your family and especially of you children . Savings bonds can be a wonderful gift for children of all ages, and the value they accumulate can build up an excellent nest egg by the time that child comes of age.
Index Mutual Funds
Over the long run, the stock market has provided superior returns, and buying a low cost index fund is a great way to let your child participate in those returns. Many mutual fun companies provide special accounts for children, and the minimum investments for these funds are generally quite low. Parents and grandparents can easily open an account on behalf of their children and add to that investment each year.
Savings Account
For short-term needs, a savings account can be a wonderful learning tool. Having a savings account can provide some critical lessons, including the value of saving for a major purchase and the importance of delaying gratification. Parents may want to jump-start their child’s saving by offering to match each dollar invested–similar to the match that some employers offer on 401(k) plans.