How would I invest in a child's future?

I have a nephew that is 15 and practically has no mother. She is in jail and is a career criminal He has a legal guardian, who I dont trust either. I want to invest approx $20,000 for his future but I dont want ANYONE to be able to touch it until he is 21 and, then, only him. CD's, savings account, ....? Any suggestions?

At this point of time I do not believe in any of the interest bearing investment (such as CD's or Saving Accounts). The economy is in a recession, and unfortunately an inflationary recession. Meaning, that prices are going to go up so high things will be very expensive. A 2 or 3 percent interest rate on 20K which is having a 10% percent inflation means that you are loosing at least 8% each year of your money's worth. Not a good investment strategy (in my opinion)

I will tell you what I am doing, or planning on doing, then you can decide what to do with this information.

I very much believe now to invest into something that is worth investing to. Basically Gold and Silver. If you were going to have a portfolio, have a good position (somewhere around 25%-30%) into gold. I want to grow up having my money intact. I do not want to have my money being eaten up by the falling worth of the US dollar. And do not believe the nonsense that the inflation is at 4 or 5 percent. It is much higher, it is just these government people are manipulating the numbers (read about how the government is manipulating the CPI).

I personally do not believe that the US economy is going to rebound anytime soon (if this administration and the next one keeps doing what it is doing right now). That is why I am not trusting any investment that has a good portion of it's portfolio in US denominated Dollars. Try to get out of the Dollar and invest somewhere else (like Asia, and even maybe Europe, Australia and south America).

Your best bet to invest abroad is to buy some ETF's (exchanged traded funds much like the Mutual Funds however they charge much less fees which will give you more money in the end). Personal Advice: do not put all of your money into one ETF in one country, try to diversify into many countries and many sectors. Also, Try not to put all the money into the ETF's all at once. Try to buy as the price dips. This way you will average out your losses.

Also, one departing piece of advice, make sure that your ETFs pays high dividends and reinvest those dividends, this ultimately will get you back more money.

Think of the future, do not think of the current fluctuation in the market, and I hope that you ll do well (this is what I am planning or what I am doing at this point of time). Be patient, and do not panic to what's happening in the short trends of this market.

You want to learn more, read and watch youtube videos about this guy called Peter Schiff. You ll understand a lot once you listen to him.

You can set up a UGMA or UTMA or College 529 Plan IRA.

You want to be the trustee for the account, and have full trading authority, power of attorney. Just make sure that date the child does not have access to the account until after 18.

You can be the person who makes the tuition payments from the account and if there is anything left after college, the balance goes to the beneficiary.

Be sure to name a beneficiary in the event something happens to the child. If you do not, the funds may end up going to his estate, and if he is still a minor, the parent may get the funds. You can put yourself as contingent beneficiary.

I would not discuss this money with anyone related to family, custodian, or even the child until he is 18 and ready for and going college. You may need to get his SS# however. Be creative.

I would seek a professional advisor who has expertise in setting up these plans, pref one with a major brokerage firm. I would not do it myself if one does not understand these plans and investments. Make sure the advisor has no less than 10 years exp with child investment plans.

Ignore the post re: buying insurance. Insurance is NOT an investment. (I'm also a former insurance agent).

Stay away from banks and life insurance companies they don't know how to invest. This is not their expertise.

You may want to look at indexing a modest portion of those funds in the S&P 500 Index.

S&P 500 Index
http://en.wikipedia.org/wiki/S&P_500
http://www.fool.com/mutualfunds/indexfunds/indexfunds01.htm
http://www.usatoday.com/money/perfi/columnist/krantz/2007-07-20-sp500_N.htm

Dollar Cost Averaging is another useful tool. I would not put all the money in at once. Might want to average the funds over the course over a year.

Break it up in monthly equal installments automatically (automatic investing).
http://en.wikipedia.org/wiki/Dollar_cost_averaging

Your not going to make many money in CD's, esp with rates going down to near nothing. See an expert advisor for personalized help.

Nice gesture, good luck for all!

I should seek legal advice.

A revocable trust for the the child for the exclusive purpose of education and the related costs, as should be defined by you. I am worried about the guardian since you see something wrong on that front. You seem to the only reasonable and mature individual in this terrible Christmas time story. I hope your nephew recognizes you as his best hope for a productive life. May your Lord bless you, sir.

a 529 plan is a good way to save for higher education. He can get it when he is 18

Why 21? He will likely lose the legal guardian when he reaches 18. Let's consider both cases.

How about life insurance? It's like a bond that only pays interest as long as the kid is alive. This reasonably risk-free instrument allows him to earn more interest than a traditional CD. You can work out the conditions for the payment with the insurer. A trust fund or managed account are other solutions.

@ answer below: dollar cost averaging only makes sense when investing in volatile assets such as stocks. This kind of investment isn't too wise in the case of a 3 year duration; it makes somewhat more sense in the 6 year duration case (for diversification purposes). Anyhow you don't need a brokerage firm (a bank will suffice) to set up a trust fund unless you plan on teaching the kid (how) to invest for his future by himself. Then you'll need to tell him sooner or later about this gift and talk to him about how to handle it. Whereas it seems to me all you care about is that he gets the money at a certain age, then goes off to do whatever he wants with it.

YES OUT OF THE US DOLLAR

It is now collapsing, as the economy is going down now. The cut of interest rates today is the indicator and I would invest it into gold, silver, food, or any real asset. OUT OF THE US DOLLAR

GET OUT PLEASE

Peace and light and watch the links to find out why I say this, because I say this out of love :)

Peace

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