Kids and Cash

[WARD]

Long time reader, first time poster.  I have a few capital one 360 savings accounts for my kids ages 1 and 2.  I have about 5k in each account.  I really would like advice on better options for that money instead of the tiny return I currently get.  I still want my children to be able to access it around the time they get in high school.  Any suggestions?

[Honest Abe]

You can open a custodial account for them at a brokerage (Vanguard perhaps?) You could invest in a target date 2030 fund

Have you contributed to their 529s yet?

Edit - just stumbled on this timely gem.. http://andrewhallam.com/2013/11/how-to-open-a-vanguard-investment-account-for-a-minor/

[WARD]

Thanks for those suggestions. I have 529s for both already. This is more of a starter fund to help them out. I think the vanguard  route sounds great!

[more4less]

I'd open Roth IRA for both of them, invest in VTSMX (or VTSAX after balance will go over 10K) and left it there.

[WARD]

I thought they had to have earned income in order to start a Roth?  Do you just mean open one for me and give it to them?

[Dicot]

Yes, they do need earned income to start a Roth. That's do-able for us because we own our own business and our son gets paid - on the books - to do minor tasks for us. We have a non-custodial account for him that's his car fund and then a custodial brokerage account with Vanguard funds and a few individual stocks to teach him about the market.

[ASquared]

Do you have an ESA for each as well? You can do both an ESA and a 529.  ESA limited to 2000/yr now but is something at least.  Tax free growth and can be used for any educational expenses, including primary and secondary education in addition to college.