We've been squirreling money away for our Grands. We started out by putting money into 529s, but the 2008 recession and the follow-on downturn in financial markets have discouraged us from plowing more money into that vehicle. I've opened savings accounts for each of them. The interest rate on those accounts is, like the rest of the investment firmament, discouraging. Those accounts are not even keeping up with inflation--but at least the money isn't melting away into the downs of the stock market.
The idea behind my and Paterfamilias' savings for our four Grands is simple: We want to make sure there's some money there for their education. Their parents will bear the bulk of that burden; maybe the Grands will have to take out loans to finance some of it. But we hope our little bit will take the edge off the cost. Our parents did that for our kids--every birthday they sent a small check to put in an account for the kids. The wonder of compounded interest made those accounts a help when the college bills started rolling in. It's a role model we plan to emulate. But how to do it in today's difficult financial time?
PBS's new Web site, Next Avenue, which aims to cover financial (and other) issues of concern to those of us moving further along the age continuum, currently has a video with the heady title, "Saving for Your Grandkids." You can link to it here. It won't give you answers to or even ideas for the investment questions we're all wrestling with, but Ric Edelman offers very generalized caveats and options for those of us who want to put money away for our grandkids.
My take-aways from the video:
You can set up ways to save for their education or to save for their retirement. Few of us think about the latter. (How to do it, he doesn't say.)
Whatever plan you create for the grandkids you have, be sure you can replicate it for grandkids that might come along in the future. Fair is fair, even if someone's a latecomer.