Choosing between a Children's Savings Account and Investment Account

You can help your child understand the value of money by establishing a children's savings account in his or her name. This not only gives your child a chance to learn about banking; if managed properly, it will also result in a large amount of savings by the time he or she matures. You may realize more benefit with an investment count, but the choice is yours.

Savings Account Advantages

The main advantage of choosing the savings account is education. Your child will be able to go straight to the bank and interact with tellers, asking questions about his or her account. This is a much more straightforward model to save money, and your child is more likely to understand this type of account.

Investment Account Advantages

With an investment account, education will take a back seat to growing the size of the account. It is unlikely a child will fully understand an investment account, and he or she will also have limited interactions with the broker and the account. However, the child will benefit by seeing a potentially higher amount of growth, setting up a large advantage for later in life. One option is to choose simple investments, like Treasury Bonds, while the child is young to increase understanding.

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