Bank

• Before you set up an investment account, make sure your bank is FDIC-insured. That means that if the bank loses money, the government will reimburse you for it.
  
  

Savings Account

• Often the best initial investment fund for children is a savings account. Your child can deposit money regularly into a savings account and let it accrue interest. The only con is that the interest rate is generally low for savings accounts.
  
  

Certificate of Deposit

• A certificate of deposit (CD) often pays a higher interest rate. With a CD, your child makes a fixed deposit in exchange for a fixed amount of interest, returned to your child when the certificate reaches its date of maturity.
  
  

Money Market Fund

• A money market fund is another type of savings account that requires an initial investment of $1,000 or more. Its interest rate is not fixed, but fluctuates according to the nation's most common interest rates.
  
  

Changing Investment Funds

• It's a good idea to start your child with a basic savings fund and later move on to a higher-interest fund, such as a CD or money market fund. This often gives higher returns to your child in the long run.