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How can I give children money to encourage long term savings?
I was looking at EE savings bonds, but the maturity on those seems to be 20 years and if I understand correctly if you don't keep it the full 20 years, you just get 0.06% interest, slightly better than some savings accounts but not much (especially when you consider interest rates will hopefully rise in the next 20 years).
I would like to purchase a savings bond but with a maturity date of perhaps 10-15 years. I don't see how you can do this. The child I am purchasing for is 5 years old so it would be nice for it to mature between the time she would start driving and when she graduates college.
Are there any other savings instruments that would be easily giftable and suitable to these goals? Also, the amount I would like to give is small probably about $100, but I would like to start something where I can give the about the same size gift yearly or something similar.
1 Answer
- 9 years agoFavorite Answer
Sign up a Pfizer (PFE) DRIP plan. In the long run, stock outperforms bond market. People might be argued that Stock is riskier than bond, but if you look at Greece bond or Lehman sub-prime link bond they are not that riskier. The only risk for biopharmaceutical company is that people are being healthier that they no longer need drugs, which is unlikely. Their div yield is quite appealing than any govt bond. The only con for this plan is the initial purchase is $500, but you don't need to give the same amount after it is open.
