Child Savings Accounts
You should consider a child savings account or buying bonds when planning for your child’s financial future. From the time we first become parents, of course we want the best for our children. We do everything we can take care of them responsibly. We feed, clothe and love them, and hope that they’ll grow up to be everything they can be, with full and active lives. However, if something should happen to us as parents, what would happen to our children? Life insurance is one way to help our children make sure they have what they need if the guardians we choose for them do not have the financial means to provide the life we want for them. Savings accounts and bonds offer a viable strategy regardless of your financial status.
When you start to invest in your childs future this way, you do a number of beneficial things. First of all, you can begin to save money in your children’s names when they’re young by making regular deposits. They can also contribute funds to their own accounts, in the process learning how important and rewarding saving can be. This can help offset the cost of tuition for college as educational costs in the country skyrocket or for any other educational programs they might need in the future. However, unlike many college savings programs, funds in a child savings account do not have to be spent solely for education in the event, god forbid, they choose not to go to college. Money is available should there be an emergency, or for any other situation, without penalty for withdrawal. The money deposited in a child savings account is available to the child immediately.
Several financial institutions offer special accounts just for children, so finding one should not be a problem. But, finding the best child savings account that has a comparatively high interest rate will probably require a little homework. Not much though, you can easily compare financial institutions online with a click of the mouse. However, these accounts may include a requirement that an adult will be in charge of the money until the child reaches a certain age.
Another way to save money for your children’s future is to purchase bonds for them. Bonds hold the money you have initially invested for a set amount of time before they mature, so the interest rate on these is usually higher than a more flexible savings account. However, you shouldn’t put too much money away into these types of bonds unless you are prepared to have money in them for a long time. Usually, bonds must sit for about three years before they mature, and in many cases, much longer, before you can actually cash them in to receive full value.
Regardless of whether you decide on savings, purchasing bonds or both, you’ll create a financial cushion for your children’s future when they may need it most. This also gives you the peace of mind to know that your children will be taken care of long past your initial investments in them financially. With a little research for choosing the best one and regular deposits into a child savings account your kids financial foundation will be laid.
The I Series Bonds
Savings accounts are typically among the lowest earning investments anyone can ever make. As for high yields, almost all people will typically look to CDs, stocks and other much less conservative but very potentially higher earning investments. I Series Bonds are sort of the middle ground between saving accounts and more some lucrative investments, thus it will provide much better interest rates than saving accounts while remaining very low-risk.
What they are
The great thing about I Series bonds is that they are inflation based, which means they will earn interest based on inflation plus a bit more. That way, even with a greatly fluctuating inflation rate, you can be sure of some earnings. Recently in fact, these helpful bonds have been set at +.7% inflation to further guarantee earnings for these bond holders.
One of the conditions for investing in I Series bonds though is that you don’t touch them for at least a year. The interest rates for these bonds will almost always be higher than for savings accounts; unless by some miracle inflation is very low.
Things to Consider
You really need to have very disposable income to invest in these such bonds, the minimum duration of the investment is a year or annually. Unless you can surely afford to have money to be tied up that long, this really wouldn’t be a good idea for you after all. Should you have the disposable cash though, I Series Bonds are among the most secure investments you can make and it will be of great help for you not just for today but for your future as well.
The Future Begins Now
There is nothing new about saving money; most people have some type of savings account. However, the reasons people save and the manner in which they do it has changed over time, and modern banking is determined to help.
In the past, saving was about security, peace of mind and knowing that you had options should you run into difficulty somewhere down the line. These days it is a little more structured and goal-oriented, resulting in a more thorough analysis of savings options before a decision is reached.
Governments actively encourage saving and nowadays many parents attempt to instil a saving mentality in their children from an early age. Deeming it wise to be prudent and knowing that it certainly cannot hurt, people now are prepared to search a little further than their local bank for the best deal in savings.
Many ambitious young people are planners, constantly thinking ahead with regards to property, travel, career and family. All of these require money and thus a savings account is the next step after taking care of their regular obligations with a current account.
The days when savings were for a ‘rainy day’ are long past. Now savings play a much more significant role in people’s long term finances. Savings are incorporated into plans for homes, holiday property, economic downturns, having children, interest rate jumps affecting mortgages, health cover and child trust funds to mention a few.
Banks and other financial institutions have responded to the reasons why people save and their range of savings products reflects this shift in attitude amongst the public. To the consumer, a bank savings account now often represents a firmer, more focused commitment to a personal goal.
The amounts moved to savings accounts are now more substantial and with a more specific purpose in mind. The more organised and financially aware among us realise the benefits of long term planning and seek out those providing the savings accounts that best suit their wishes as well as those providing the best rate of return or value for money.
People are also becoming more aware of the pitfalls of inadequate financial planning and the need to have extra resources at hand to deal with them. Fluctuating interest rates and slowing economic growth can affect both the job and mortgage markets. Savings are not just a quick fix to these problems, but a sound investment that gives people more options for the long-term.
Modern savings accounts help people achieve their personal goals by being flexible and adaptable while still retaining the original merits of saving such as security. People now look at them in terms of a useful tool as they have shed their static and rigid image and are now looked upon as a helpful and significant long term allay.
Savings Accounts and Investments – The Different Ways to Use Them
Savings accounts can be used in different ways. It can be used for wealth-generation, or for being able to create a financial reservoir for purchases. Here are top five ways that you can best leverage savings, as opposed to investment accounts like stocks or mutual funds.
In creating a retirement fund, investments with compounded interest are best. However, it also helps to keep some of the money set aside for retirement purposes in high interest accounts. Rather than put all your eggs in one basket, it’s always wise to diversify. When it comes to investment, savings and wealth-generation, diversification is the keyword. When saving up for major purchases, like real-estate property, whether residential or rental property, your savings can also be put to great use. Investing your money may not only take time, it may also take some paperwork and a degree of difficulty to liquidate the funds. Also, investments like stocks, even mutual funds, are meant for the long-term: these are not meant to be touched for at least five years. When creating a college fund for your college-bound kids, a 529 Savings Account may be the best choice. This is because that specific account does not get taxed. Also, there are quite a number of other financial institutions that give rewards when you save in a 529 Account: Upromise credit cards gives rewards that will be credited to your 529 account. BabyMint also offers rebates which you can deposit to your 529 Account instead. Ohio CollegeAdvantage 529 Accounts also gives rebates for its refer-a-friend program. As you enroll your whole family, you may well be able to recoup the amount you’ve invested in opening the accounts. Saving up for major purchases and expenses like furniture, computer equipment, home repairs could also benefit from high yield savings and CD/time deposit accounts. Instead of using your credit card to make these purchases, you can make use of the high-interest accounts to allow you to not only store your money as you gather the entire amount of what you need, they would also allow you to earn interest on the money you gather. Debt help experts like Dave Ramsey recommend building an emergency fund even as you move to obliterate your debt. Try opting for accounts in banks like EverBank or Ally Bank. Both have higher interest rates than the regular savings accounts, but try looking at either this EverBank review or this Ally Bank review and see which bank you’d prefer more. Keeping your emergency funds in these high interest accounts would not only help you keep your emergency funds intact, they would also help you allow your funds to gain higher interest returns. Just make sure that you keep shorter contract times for CD’s, however, and keep the bulk of your accounts on the money market accounts. That way, if emergencies do arise, you can withdraw your funds faster. Then just to make sure that you have liquid funds available for those urgent emergencies, keep a stash of money in a bank account you should never withdraw from. Make sure you find the highest interest rates in the market to make the most out of these accounts.
As you can see, savings accounts can be made use of in various ways. More than allowing you to store your savings, our suggestions here will help you explore the other possibilities for savings accounts. And had you never heard of high yield savings accounts before this article, we’re glad to be of help! Make the most out of your savings accounts by choosing the best banks, the best account types, and the best interest rates available to you.