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Hello. I am looking for advice on what to do with some gift money that my father has given to my children (his grandkids). The background is a little complicated but I will try to simplify it. He has 5 grandkids total. Two of them are my children and they are very young (8 and 4). The two oldest grandkids (my nieces) are in their mid-20s. When they graduated from high school, he gave them a graduation present of $5000 each and specified its use for a down payment on a new car. He is very particular about ensuring that each grandchild gets treated exactly the same when it comes to financial things, so he just recently gave me two checks (one for each one of my kids) and said they were for an early graduation present towards purchasing a new car for when they go to college. He is speculating that he will not be around when they graduate, and since he has been a heavy smoker for over 50 years he is nervous about a sudden medical problem (heart attack or stroke), so he wants to get some financial things taken care of now. The checks are actually much higher than $5000 because he calculated in an anticipated inflation rate to equate what $5000 was worth in 2010 vs. what it will be worth in 2026 and 2030.
When he gave me the checks, he said he wanted me to do the following...
1) Put the money in individual accounts, one for each kid, with both my name and the child's name on the account.
2) Put it into something that will make a little money, even though interest rates stink right now, the best I can find.
3) He recommended though to not put it into something that will tie it up for a long period of time. He believes that interest rates will likely go up in the near future and we do not want to be locked into something long term with a fixed rate based on today's rates. If the interest rates go up significantly in a couple years, he wants me to be able to reinvest the money into something with a higher rate of return.
I understand that 2 and 3 are counterintuitive to each other. Therefore, I am looking for some type of account to put the money that might be a good "compromise." Something that might tie the money up for a short period of time but may still have a little return too.
What would any of you recommend?
When he gave me the checks, he said he wanted me to do the following...
1) Put the money in individual accounts, one for each kid, with both my name and the child's name on the account.
2) Put it into something that will make a little money, even though interest rates stink right now, the best I can find.
3) He recommended though to not put it into something that will tie it up for a long period of time. He believes that interest rates will likely go up in the near future and we do not want to be locked into something long term with a fixed rate based on today's rates. If the interest rates go up significantly in a couple years, he wants me to be able to reinvest the money into something with a higher rate of return.
I understand that 2 and 3 are counterintuitive to each other. Therefore, I am looking for some type of account to put the money that might be a good "compromise." Something that might tie the money up for a short period of time but may still have a little return too.
What would any of you recommend?
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