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Help a Reader: Save and Invest for Kids

Time for some reader input! Here’s a question from Jaynee [1]. She and her husband have been doing a great job saving money for their kids. They diligently put gifts the kids receive into their savings accounts.

However, now that the balances are growing, she knows a savings account isn’t the best place for the money anymore. Jaynee would like your help to determine where she should put the money.


  • Two children ages 4 and 5.
  • They deposit money given to the kids for birthdays and Christmas into their savings accounts.
  • Each of the kids now have over $5,000 in their accounts.
  • I assume the money won’t be withdrawn for at least 10-15 years based on the options she is considering.


Jaynee wants to transfer the money to some sort of long-term plan. She’s unsure where she should put it, but is considering an IRA, a CD or their 529 college plans. Here are some of Jaynee’s thoughts:

1. Roth IRA

I’m considering a Roth IRA, so that when they begin working at age 16 they’ll already have a base and can then begin contributing to it when they get their first jobs. (Although, the kids cannot have an IRA until they have earned income, so they would need to use the parents’ IRAs.)

2. Long Term CD

Another part of me in considering several long-term CDs since my credit union is currently offering 7-yr $1K share certificates for 4.6% APY and 4.5% dividends compounded daily and credited monthly.

3. 529 Plan

Lastly, my husband thinks putting it into their 529 plans is best.

What Do You Suggest?

Let’s help Jaynee out! I’ll highlight your suggestions and add mine in a future article.

Where should she put the money for her kids? Should they keep it all together or spread it out in a few different accounts?

If you are saving for your children, what are you doing?