- Personal Finance
Investment Bonds for Babies and Best Investment bonds for children - Gifts For Children That Are A Good Investment
Whats the best bond investment for children?
Municipal bonds investment, investment bonds, best saving bonds, saving bonds interest rates, investing municipal bonds, municipal bond rates, corporate bonds, how to buy bonds, how to cash bonds?
Do all of these questions perplex you? I know they certainly used to mystify me.
So what's with the question Bonds for babies, or best bond investment for children? Im at the age where lots of nieces and nephews are starting to spring up, with these new lives come new birthdays and Christmases, Im not a commercial fellow, but I do want to give a gift of value to these new family members. I think most babies get just as much enjoyment from wrapping paper as an actual gift, so Im certainly not going to spring for the newest tickle me elmo for a 2 year old and as they get older I value imagination and don't want to support the newest fad war game or whatever crap is popular in their upcoming days.
So what is a valuable present, well something of actual value of course! But cash is crude and unimaginative, it wont be enjoyed or appreciated by a child, so I thought...well don't those bond things mature with age, and if they have to wait 15 plus years to cash the bonds in, wont they be worth more than I put in now? If I get them $50 bonds for each birthday, by the time they turn 18 they can maybe buy a car or afford books at the first semester of college? Right?
But, when I asked around for help on this issue, the only advice I got , is go to Bank of America and ask them! The online world was either unfamiliar or to filled with jargon for me to easily understand my best options. So, I had to roll up my sleeves and get to researching (lucky for me, couple of college and high school buddies ended up on Wall Street...so I got some one on one explaining of the technical aspects)
Hence this guide was born. So what form of bond, investment,municipal, corporate, bank or something else should I buy with the express interest of gifting to young children, what will yield the greatest return in regards to bond interest rates and still provide a reliable level of security in being at least worth the amount I put into it initially?
Tax Free Bonds For Babies?
Investing Bonds ..what is a bond?
Well, as I wondered what a bond was anyway...and specifically what bonds would mature best in ten years. It turns out, that a bond by definition is a debt security that matures in more than ten years.
Some classifications of fixed income securities:
Bills - debt securities maturing in less than one year.
Notes - debt securities maturing in one to 10 years.
Bonds - debt securities maturing in more than 10 years.
So, My first question has already been answered, I definitely want to purchase bonds for the youngsters in my family, and perhaps after they turn 10-12 years old, I may switch over to buying Notes, my goal being their ability to cash their bonds in, should they desite..when they reach either 18 or 21 years old.
Also, my second question of what is dependable is kind of answered by the very nature of a bond...fixed income securities,.
So what exactly does that mean and are some securities more secure than others? DO the rates of return vary with the risk you take upon purchasing the bond and from who?
My (simple) understanding at this early point is that by being a bond holder I am in fact lending money to either a company (corporate bond) a city or county (municipal bond) a government ( war bonds) a bank or financial institution (bank bonds) ..and the list goes on.
As part of the terms of the bond, in most cases a set maturation time is agreed upon and a set interest...but there seems to be lots and lots of options still, so now I am more confused than ever when trying to figure out which bond to purchase as a gift for babies!
So what does Fixed Income security mean in relation to a bond?
So as the lender of money to finance an expansion or development, I hold this piece of paper.. this bond, I am guaranteed repayment of the bond? I can receive residuals or payments on the interest? How does this relate to current economic issues as far as the stability of my guarantee and what is the safest bet for my intended use...a gift for a child that will not be cashed for a minimum of 10 years..and possibly not for 15-21 years?
Bond Investing Research
Really what are my options! -------- Investment bonds for children
So, now im still confused, I see that I have a lot of options, I know that a "bond" is what im looking for.
Now, maybe the amount Im buying can help me filter down my choices, I was hoping to buy $50.00 bonds, maybe even $25.00 for smaller events, I mean, my plan is for 18-21 years of gifts, so even a small sum is going to add up to around a $1000 per child.
So who wants to sell me $25 bonds, and how do I go about purchasing them? Already, Ive seen that this isn't as simple a process as i thought.
It seems like the safest bet, and therefore the one with the lowest interest rates (coupon) is federal treasury bonds and next would be state municipal bonds.
But, I have to buy a bond though a broker and pay the broker for there time?
So now my 25-50 budget has just decreased!
Im trying to figure out how to best get around this provision and Im exposed to the option of using online brokerage firms, some with fees as low as $1 per purchase.
So what online brokerage firms should I use? Im going to pursue a treasury bond just to play it safe, which has an average interest rate of 2-3%...1.50 per year per 50.00!, well I guess that adds up each year exponentially. Perhaps I can invest larger in my later years.
So who are the trustworthy online bond sellers?
The first company that is recommended to me is e-Trade, Ive heard of them so I check them out first. As I start wading through the options, Im quick to realize that this isn't going to be simple.
So, I end...not with answers, but with more questions..I will buy bonds for babies and they will be in small values via treasury or municipal bonds and I will use an online broker to purchase.
I will continue to write and share my findings as I search and experience, I will be completely open to your suggestions into how to pursue this current mission.
Per a commenter's recommendation I will be reading
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