This is a great idea. I have no ideas on specifically how you should go about this, but I do have a couple questions for you to ponder:
- Obviously I have no idea how many children your sister and two cousins will have, but it seems likely that you could have 3, 4, 5, or more nieces and nephews eventually. I suggest that you "go easy" investing for the first child ... until you know how many children you're talking about. I mean, it'd be a shame to invest $1000 + later installments for the first child, then realize that you can't "keep it up" for the younger children. Once you feel your nieces and nephews have all arrived, you can always "catch everyone up" ... but it'd be a shame to find yourself unable to give the youngers what you gave the olders.
- Or, will you just have one big account, which you intend to "share out" to the adult children at some point in the future?
- Will you tell the parents and/or the children about this money you're putting aside?
- Will you give it to them all at once, or in installments? At high school graduation? Half then and half at age 25?
- Will you put the money in the children's names, or will you keep it in your own name until you're ready to make the gift? Personal opinion: All other things being equal, keep it in your name. If the children someday apply for college FAFSA aid, this would "count against them" if it's in their names. Also -- God forbid -- one of these nieces/nephews reaches adulthood and has not shown responsibility, you'd have the option of holding the money back for a while. I know, no one looks at a sweet little baby and expects anything other than good deeds, but some kids do go astray, and IF that were to happen, you might find yourself glad to have the money in your own control.
Congrats on your prospective aunthood!