Best savings account for a baby/child?

I have heard mixed reviews but wanted to know your opinion on the best savings account to start for a baby who won't be using the money till after they're 18.

I have heard 529's, CD's, money markets, etc. Everyone I've asked has a different opinion so far lol. Any input would be great!

TIA

Re: Best savings account for a baby/child?

We invest in the stock market for our kids. But my DH is in research at a financial services firm so he is constantly watching what we are invested in and moving things around as he feels is needed.

If I had to handle it we'd be in a 529 since I'm not as on top of the day to day changes in the stock market, nor am I really interested in starting to follow it more closely.

Re: Best savings account for a baby/child?

I personally feel that there are pluses and minuses to every financial product out there. Others may define the pluses/minuses differently than I do. For me, this is how I feel about them, but it might be different for someone else and only you can decide what works correctly for you and your families financial needs.

UTMA (can be a savings account at a bank or a brokerage account at a firm. Both parent and child's name are on the account)
plus - money can be used for anything at any time.
minus - once the child turns 18 the money is theirs to do with as they please. If child goes to college, the money in this account is counted the most towards ability to pay.

Note for brokerage account (stocks) many firms have a $2500 minimum account balance in order to trade stocks in a UTMA account.

529
plus - money saved for college/school expenses. Some states give preferential tax treatment for money in this account. NJ does not, NY does. The money in the account is not treated as heavily towards college payments as a UTMA account because it is considered in the parent's name.
minus - fees, restricted to certain program defined funds, must be used only for certain expenditures.

CD (certificate of deposit)/Bonds
plus - they give guaranteed (mostly) interest rates
minus - the interest rates have been really low lately. Your money is locked away for a certain period of time. Should you need it before then you may face penalties.

Saving money in your name for your child is also an option. You have the most control over this money as your DCs name is not on the account. See if your bank offers multiple accounts with direct deposit. You can direct $ per pay period to automatically fund the account.

If your company offers financial planning services (akon) is a popular company that large companies offer as a benefit to its employees - I would ask them if they can do a free financial plan for you.

I am personally not a fan of the 529 product for my family because 1. There are fees, 2. We don't get preferential tax treatment for monies deposited/withdrawn from the account since we are in NJ.

Message edited 9/27/2012 9:22:29 AM.

Best savings account for a baby/child?

Thank you both for your responses!