I have two sets of very doting grandparents with the first grandchild in the family, and as such, they are being fairly generous already (Not even a year old yet) with giving money and other items.

One set of grandparents has already set up a 529 account that I am also making contributions to, so while I can deposit money into that, I don't know that I want to necessarily lock every dollar he gets into that format.

Got a check today (Not sure of amount, but my mother said to "open and deposit right away" as they are nervous about the size of it and waiting 3 weeks to his birthday to open), so I imagine it's of a decent size.

I already have a social security card for him, so opening any kind of an account is an option. I would hope that he would use it sensibly, but if he wants to blow it on wheels and wild women, that's ok too. I would just like it to accrue as much as possible between now and then, so I'd like to find out if I should invest it, open a CD, or explore other options?

3 Answers 3


I was in a similar situation with my now 6 year old. So I'll share what I chose. Like you, I was already funding a 529. So I opened a custodial brokerage account with Fidelity and chose to invest in very low expense index fund ETFs which are sponsored by Fidelity, so there are no commissions. The index funds have a low turnover as well, so they tend to be minimal on capital gains.

As mentioned in the other answer, CDs aren't paying anything right now. And given your long time to grow, investing in the stock market is a decent bet. However, I would steer clear of any insurance products. They tend to be heavy on fees and low on returns. Insurance is for insuring something not for investing.

  • ETF's require share purchase, correct? Why the ETF vs. a low fee mutual fund?
    – JohnP
    Sep 22, 2015 at 17:52
  • @JohnP, I mentioned as a comment on the other answer -- Mutual funds can have a pretty hefty 'entry' fee. The minimum required to invest. I also like being able to control the price at which I buy. To my knowledge, one cannot do that with a mutual fund. Sep 22, 2015 at 17:56

American Century has their Heritage Fund:


It has a good track record.

Here are all the mutual funds from American Century:


A mutual fund is a good wayway to go as it is not subject to fluctuations throughout the day whereas an ETF is.

  • 1
    If I am investing for 10+ years, why would I care about intra day fluctuations?
    – JohnP
    Sep 22, 2015 at 15:08
  • 1
    Wow.. Those are some rather expensive funds. Some of them are over 2% per year. Sep 22, 2015 at 15:30
  • I recommended ETFs because a) it's what I'm doing. b) Many mutual funds have a minimum dollar amount to invest. The OP didn't specify what a 'decent' size is, but some of the American Century funds are $2500, and some of the Fidelity funds are $10,000. With an ETF, I can get started with one share if I choose. Sep 22, 2015 at 15:50
  • @johnp if you are able to ignore the market for 10 years then it would make no difference to you. As for me, I check the price of the securities I own several times a day Sep 22, 2015 at 17:23
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    @JackSwayzeSr - Something productive? :p But no, never day traded. Day trading makes sense tracking all the changes, but for a long term ETF or mutual fund, meh. Not so much. :)
    – JohnP
    Sep 22, 2015 at 20:45

CDs pay less than the going rate so that the banks can earn money. Investing is risky right now due to the inaction of the Fed.

Try your independent life insurance agent. You could get endowment life insurance. It would pay out at age 21.

If you decide to invest it yourself try to buy a stable equity fund. My 'bedrock' fund is PGF. It pays dividends each month and is currently yealding 5.5% per year. Scottrade has a facility to automatically reinvest the dividend each month at no commission.


  • 5
    For most people, using life insurance as an investment vehicle is not a good choice. Doing it for a child's money is even worse. In my opinion, this is awful advice. Sep 19, 2015 at 20:09
  • The OP's child is less than a year old. Risk is subjective, but over the next ~2 decades, any perceived risk should be diminished. Sep 22, 2015 at 14:38

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