My Son's Money

My son, C., will be 18 months old tomorrow. He has a while before he's old enough to spend his own money. But in the mean time, he has collected a small sum of money from gifts and holidays. I would like to help grow his money until he is old enough to manage it himself.

Right now, we have his money stowed away in a simple savings account at our local bank. I see this only as a temporary measure due to the low, low interest rate that is offered. What I would like to do once he has enough is move his money into a long-term CD. He would get a much better interest rate and there would be no concern over liquidity since he won't be needing it anytime soon. Our next step would be to move his money to a money market account or fund. Again, this would allow him a better return on his money plus give him some access.

I've also thought about opening him a high interest rate online savings account like ING or HSBC Direct. I think for the sake of simplicity and accesability we will forgo this option for now. I don't know. What do you guys think?

My company offers U.S. Savings bonds through payroll deduction. I think I might start buying him bonds for his birthday and Christmas just to give him another option in his portfolio.

I know it seems like a long time before any of this will really matter. However, the past year and a half have flown by us. I don't want to wake up tomorrow and him be 18 going off to college unprepared. These are the type things I think about now. It's amazing what can change in a year and a half.

What say ye?