I have a newborn and would like to start putting money away for her. Since we won’t be withdrawing from this account I would like one that earns a lot of interest.
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Thinking of investing your savings?
While increasing your savings is good, multiplying your money through smart investments feels great - there are lots of opportunities out there and you can be successful if you're arming yourself with the right information.
Where to start?
If you're going to try your luck on the stock market or trading options, first start by learning the basics and delay as much as possible buying real positions. One way of getting hands-on experience with the markets is through online trading - either forex or binary options are good learning grounds and most online brokers offer trial accounts free of charge (if you're wondering what are binary options, 24option.com has very good resources on it, besides offering a free practice account and a wealth of information about binary trading in general). Final warning for the very eager: binary options are exotic financial instruments; real trading involves substantial risk of monetary loss.
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I would not recommend a savings account for this purpose. If you want to save for college, you have a number of options. A VUL can be a great vehicle for saving money for a child, since insurance costs are minimal, and you can overfund the policy. This gives you tax-free withdrawals with stock market returns. It also locks-in insurability, which is a nice feature.
You could also invest in Variable Annuities and/or Mutual Funds, although a VA will not allow withdrawals until retirements, and Mutual Fund returns are taxable annually.
You can also look at several available education savings plans, but you want to be careful with these, because they can keep your child from qualifying for free money (needs-based scholarships and grants) and low interest loans (government insured), as these accounts are automatically included in “money available for education.” The Mutual Fund would also fall into this category at 60% in the child’s name or at 40% in your name. The VA and VUL are not included, nor is the equity in your personal residence.
You should speak to a Financial Planner for these and other options. While you are at it, you should also make sure that your own finances are in order for retirement and other needs.
Good luck, and happy planning!
Never go for an savings account apply for a mutual fund with a fixed demand of money
The best would be a money market or better yet get a mutual fund that is 60% bonds and 40% stocks that will earn around 6-10% per year on average over 18 years.