Save for Your Child’s Future With These Investment Options

With tuition fees and costs of living on the rise, it's important to plan for your child's future. What are ways to invest money for your child?

It can be useful to consult with a professional to decide what to invest in for your children. It’s never too early to start investing, even if it’s only a few dollars.

A high-yield savings account

Whereas high-yield saving accounts offer a higher yield than traditional accounts, they may not offer as much return as other investment tools. But they're often easier and safer than other investments.

These types of savings accounts are offered by several financial institutions, especially credit unions, which tend to offer much better interest rates than commercial banks. Children will typically be able to access their savings and be issued a debit card by the time they turn 13, allowing them to use their savings how they want in addition to gaining experience with payment cards.

A 529 savings plan

To save for college costs, 529 plans are a common option. The accounts can be used to invest in stocks, funds, bonds, and more, and withdrawals from the account are tax-free as long as the funds are used for school.

A custodial account

Custodial accounts can be similar to 529 plans, in that you can invest in stocks and funds for a minor. Once that minor reaches 18, they gain custody of the account and can use it how they please. This type of account is great to have along with a 529 plan.

A Roth IRA

Roth IRAs are used by many as a retirement plan but can also be started for a child. It's worth noting that withdrawals from a Roth before the accountholder is 50.5 years old will result in tax penalties.

Investing money for a child is great, but if they don’t learn how to use it correctly, everything you invested for them can go to waste. Giving them guidance on personal finance when they're young can help them make better financial decisions when they reach adulthood.