We are about to have our first born in December. I was thinking of opening a mutual fund account through Fidelity (they have my 401k already) and throwing some initial funds in and then adding each and every month until the kid is 18 at which point they can use for college, marriage, military, investments, home purchase, whatever comes up that is a responsible use (i.e. no hookers and blow!)...  

Do you think this is this a good idea or is there a better way to give the kid a savings for later on?
Should I put the child's name on the account or mine, does it matter?

Thanks.

what about a 529 plan through Fidelity as well?  It's post tax money, but some states credit you for contributions, and you won't have to worry about tax on the gains, and cost basis calculations down the line.

That's a good idea but let me play devil's advocate so I can get some feedback. I feel I could pigeon hole my child and lose out with the penalty and taxes if they didn't want to go to college and instead wanted to try a trade or try their hand at entrepreneurship. I also feel that what if they chose a differrent school outside of the state I purchased a 529 plan, I could take a pretty good hit there as well.

I think you're confusing the prepaid 'tuition lock' state-specific 529 plan with the more portable one that doesn't lock a kid into a particular state, which is what I use.  It's the AZ 529 plan offered by Fidelity, and it's linked to a credit card which puts 2% cashback into the account.  Along with the state deduction for contributions each year, whatever is in the plan when the kid is getting ready to apply for college, doesn't get held against him/her in the financial aid application.

As another note, you can use 529 money for vocational schools -  not just for college.

Well thats definately different from what we were thinking, that sounds much better. Thank you for your insight.

give the gift of education.

financial education and traditional education.

A 529 as mentioned by another member is a great idea.  


I'm not entirely opposed to getting them a regular brokerage account if you train them to manage money properly just be aware you'll be subject to the kiddie tax on that stuff...

trust funds for financially illiterate young adults are a curse.

A 529 is a great way to save for a kid's education.  You may want to see if your state offers one and if it has additional tax benefits (relating to state taxes) that an out of state doesn't.  My state doesn't offer a 529, nor does it have a state income tax, so I was free to go to whatever state I wanted for my kid's 529.  In addition, the 529 can be transferred, so you can use it for another kid, grandkid, yourself, spouse, etc. Mine is set up to auto deduct a specific amount from my checking account one day after my paycheck is deposited.