Really early start, but thanks for question, my kids are 3 years I need to start thinking about this also

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http://www.bestmortgage-refinancing.us/

Lots of good advice here.

Stay away from the vast majority of 529 plans, which historically lag the market for the amount of risk being taken. Make sure any investments you choose are well-diversified. One product alone should not be considered.

Alternative solutions may include Roth IRA's (not recommended), high-quality permanent whole life insurance from a mutual life insurance company, and a laddered treasury bond portfolio.

Lastly, consider ALL options. This includes whether you can realistically afford the outlay, and whether you believe your kids would get greater value from working through school. Consider this: the cost of a $50,000 education for one child equates to more than $340,000 in lost retirement funds, or $17000 a year in lost retirement income. (assuming 25 years to retirement, 8% return, and 5% withdrawal rate)

If the child, instead, was saddled with this debt coming out of college, they would actually be in better shape to handle it than you. They have more years to pay it off, are paying it off with deflated dollars, and get tax-deductible interest and typically a low-interest rate (compared to other types of loans).

I have a 4 year old and a 18 month old, and my wife and I are still debating the merits of each. However, we are actively saving in accounts that we control, are diversified, and would have enough if we choose to go that direction (not likely).

Mutual fund is thebest idea ..

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Commercial Electronic processing | Equipment Leasing & Finance Association

I have to disagree. The majority of mutual funds are among the worst investments any individual can choose.

They are very popular among middle-class investors and mostly due to a lack of financial education and knowledge or very poor financial advice.

They may be able to get the funding for a college education if started when the child is born and if that is the only financial goal then a mutual fund may be able to deliver on that goal.

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It is not smart to play it safe but it is safe to play it smart.

I have to disagree with Hermes' disagreement (does that mean I actually agree? doh!).

Hermes actually hit the nail on the head with his second sentence: "They are very popular among middle-class investors and mostly due to a lack of financial education and knowledge or very poor financial advice."

The reason why mutual funds make sense for most investors is ENTIRELY because there is a lack of financial education in the USA. People also do not have the time nor the inclination to develop the knowledge necessary to effectively manage their own investments. While I am a John Bogle fan, managing investments is about managing risk and the lazy buy three index funds (bond, domestic stock, international) to allocate your portfolio has some serious downsides. To properly manage risk with asset allocation, you need your allocations broken up and allocated properly, and most of the index fund books don't do a good job of that. Right product, wrong strategy.

Now, if you can build a portfolio with a well-diversified and effective asset allocation model without mutual funds, as Hermes suggests, then go for it! Diversification and asset allocation are how you manage risk. If you want to put money into a hedge fund, that's fine. Just don't put all your money there, and make sure the fund fits into a comprehensive investment strategy.

As you'll find from some of the professionals on this board. The advice is pretty similar. One product NEVER is the solution. It's about the plan or strategy and then how that products or a set of products fit into the plan/strategy. "One product = the solution" is what you get from product salespeople. What you deserve from a financial professional is not their products, because you can get some (note: not all) of the products on your own, but their planning/strategy/experience/expertise/comprehensiveness. You also have to be somewhat of a therapist, too...

I think your disagreement with my disagreement is a double negative which means that it is a positive and you agree.

As I always say there is no right or wrong strategy just a good and a bad one and the defintion of good and bad is entirely up to the individual investor.

I agree that strategy is key when it comes to investments and that one approach is not the solution to any problem. That's why it is important to define the investment strategy and investment goals and then look for investments/advice/ and strategies that will met those goals.

Most people don't have the time, knwledge or desire to learn to manage their portfolios which is not a big problem as there is plenty of help in the marketplace. The one thing I would like for people is not to just rush to the, in my opinion, lousy mutual fund industry but look at more options on the table before deciding. After they consider more options and they decide mutual funds will fit their strategy then that is fine.

If investors only look into one option or are told that this is the only thing that makese sense and gives them good returns with low risk you take away all other options.

They should at least get the info and then decide what is the best solution and best approach for their individual situation.

I have met plenty of investors who rushed to mutual funds becasue that's what their 'financial advisors' told them to do and after a few years wished they were at least given the options to decide. True, the majority of advisors will give them a wide option of different mutual funds but that is comparable to someone who goes into the store and wants to buy fruits, if there is only a wide selection of different apples they have the choice between those and are likely to get one but if they have the choice between apples, ornages and bananas they may make a different choice.

Risk also depends on your definition and there are different options to manage that risk. Once again the individual needs to make that decision.

Personally, global equity market pose almost no risk at all which is why I love them and advice our clients on those markets. To another investor another market, another approach is favored and they invest in that one.

In my opinion, investors should at least get as much info as possible and different options to choose from and then decide what approach and what strategy is the right one for them. That's why it is important to know what you want before you look for it.

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It is not smart to play it safe but it is safe to play it smart.

I think you should invest in stocks. As you can have your money back any time you want