Investing For Our Children's Future/Education

When my kids were born, my dad began giving each of them savings bonds for a birthday present each year.  He hasn't done this for a year or so now but I found those savings bonds in my little lock box and was able to go online and download a savings bond calculator where I could put in the amount, date of issue and serial number and it gave me their current worth and how much interest was being paid on it, etc.  It was kind of cool and there was a lot of good info on savings bonds there. http://www.savingsbonds.gov

I was thinking that maybe it might be good to begin keeping with my dad's tradition and begin giving my girls savings bonds on a semi-regular basis as an investment for their education.  (one can buy them online at the above URL but the only caveat is that they have to be mailed to a US address)

ANYway...it got me thinking about other ways to invest for my children's college and future.  My US bank has some type of IRA which is actually geared towards a child's college education.  

I'm curious though as to what other options might be out there, not just in the US, but also here in the UK.  I will probably log in to Motley Fool and see what they have to say as well, but interested to know what others are doing and how it's working for them.  

Depending on your daughters' ages, it might be worth considering a stock ISA.  Normally for long-term savings (10 years) it is a reasonable bet that stocks will outperform interest bearing deposits.  Having an ISA also means you won't be taxed on the returns to your investment.

Considering stocks have fallen so far in the last 3 years, now might just be a good time - there's no guarantee they won't fall further but over a 10 year time period it is extremely unlikely.

I started off with this strategy in mind and took out a stock ISA about 2 years ago, (yes, just before stocks REALLY crashed).  And then for reasons that are far too boring to explain here, we decided to send our daughter (5yrs) to a private school instead of a state school and we needed our savings there and then.  This highlights the danger of using stocks for anything other than short term investments.

If you're nervous about stock ISAs, cash ISAs are a good alternative.

OK, I don't know all the details about our investment program for Cole, but I'll tell you what I do know.

Our life insurance broker suggested a life insurance/investment policy for Cole.  We pay $x into the account each month, it is invested into mutual funds.  Until he is 18 (or enters university) it is a straight life insurance policy; i.e. if he died we'd get $X, for funeral, medical, etc. expenses.  After 18 (or entering university), the policy is worth whatever the life insurance amount was, plus whatever the investments have earned.  We set it up so that it would cover most projected university tuition in the US by the year 2015.  This is all in US investment accounts, but still covers us here in the UK.

Just another option, might be worth checking out.  We started saving for Cole's university tuition right after he was born.  Not a lot, but every little bit helps.  And, as our strategy is long-term, we have the years to build it up.

My parents also give Cole a savings bond each year.  It's a nice tradition.

Stephanie