Our best friend, an American, has had a grandchild. We would like to set up an account for their future. Whether it be education or retirement.
We have RRSP’s, you have 401K’s. From what I gather, they are pretty much the same: limited access and big penalties, but in the end, work out to be a good investment.
What would you recommend we set up for the grandchild? Do you have “education funds” which are transferable should they decide not to go to university or college? Or just a general savings account in a U.S. bank?
Look into a 529* education account. Sort of like an IRA for education. It’s tax sheltered and you should be able to get a much better return, over the long run, than a general savings account - my kids’ saving accounts paid USD 0.12 in interest last year, they’re not much of an investment vehicle.
*That’s what it’s called in Florida, there might be a different national term or term for them in your friend’s state.
Same advice for people in both countries - stocks aren’t an investment. Put the money in something with a guaranteed rate of return. And since the U.S. economy is scheduled to go toes up before the baby hits university, really don’t put your money in U.S. stocks.