This article has also been viewed 57,911 times. Many parents want to invest money for their children’s futures that will earn good interest. Mutual funds are an investment option where money is pooled from different investors in order to purchase securities. A fund manager makes decisions as to how the money is invested. Decide the reason you are investing the money.
For many parents, they are saving for college, but for others, it may be for travel, medical expenses or living expenses. Calculate the amount of time you plan to invest the money before your child needs it. If your child is very young and will not need the money for 20 years, you will want to choose different investments than if the child needs it in 5 years. You may be able to choose a target-date mutual fund.
These investment vehicles allow you to name the year you will need the money. Consider other types of investments for children, as well as mutual funds. If your child is college-bound, you may prefer a 529 college-savings plan. The interest from these plans is not taxed by the IRS. If your child is already working, they can start saving for retirement with a Roth IRA. They can make contributions to the IRA depending upon the money they earn. This money must be used for retirement if you want to get the tax benefits.