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"investing for children"
When you are within 5 years or so of needing the money, you want to be very conservative. Now is not the time to take a chance of losing some of what you have saved. Although the interest rates are low, you should look at money market accounts, or possibly CDs. You can "ladder" the CDs which means putting the money into CDs that will come due at different times. This way if the interest rates do get better you can roll the CDs back in at a higher rate.
With 7 or 8 years you have a little more time, but I would still stay conservative. A 529 plan can be a good place to put money for education. Every state offers a 529 plans and many states give you a tax break if you invest in your home states plan. Your contributions are not deductible on your federal tax return, but your investment grows tax-deferred, and distributions to pay for the beneficiary's college costs come out federally tax-free. Again, make sure you are in low risk investment. A good website for more information on 529 plans is http://www.savingforcollege.com/intro_to_529s/what-is-a-529-plan.php
Remember, "Saving" is for a short term and "Investing" is mostly for a longer time frame. The stock market historically goes up over time, but as we saw in the last year, it can also go down in the short term. That is why when you are younger, with more time until retirement you can be more aggressive with your investments. As you get closer to your goal or to retirement you should become more conservative and take less risks.
Tornroos is right. "Match your assets to your liabilities". That being done, you should also consider your entire balance sheet to determine if there is an asset other than cash that could fund the objective in the long term. It might be an income-producing property. Just be careful about how and to what extent the gifting rules come into effect. If you have a substantial net worth, you'll want to consult a competent planner or attorney for an in-depth examination of your alternatives. Depending upon your own age and circumstances, your personal retirement plans such as a 401(k) should be considered as a possible source of funding in the near term.
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What are some 3 year and 4 year short term investment options for 25,000.00 for a minor? Also, what are some 7 & 8 year investment options for 25,000.00 for a minor. I have four children at different age levels and would like to set something up for college.