Certificates of Deposit (aka CDs)

I have been asked recently by several people what would be a good investment vehicle for their children's savings. After listening to the requirements that the investment needs to meet, I would suggest using a certificate of deposit.

The reasons being are:

1. Risk free investment (if opened through a bank)
2. Better yield (the return one receives on the CD) than a savings or money market account.
3. Automatic renewal (Worry and hassle free if you want it to continue to be renewed)
4. More liquid than a mutual fund or stocks and less risky! (liquid means that it can be turned into cash in a short amount of time)

The company that I would suggest using is ING Direct. Their CDs can be opened with as little as $1. The current APY on a 1 year bond is 5.10%

It is not as high as some companies, but the majority of banks require a minimum of $1,000 for a high rate CD. So for those that do not have a lot of money but still want a high rate this is the bank for you!