3 replies to this topic

[markber]

LINK

Note: Their interest rates kinda suck though. I wonder if you could get $1000 or more in interest if you simply deposited $25 per month for 12 years in a high interest account elsewhere.


Terms:

* Account must be opened before child's 6th birthday.
* To receive the $1,000 bonus plus interest, you must make net deposits of $25 minimum per month. One skipped deposit allowed per year.
* $1,000 bonus plus interest will be deposited into the account on the child's 18th birthday.

[shybenny]

It is not worthy. Here is the financial analysis:

. Open an account before a child's 6th birthday.
. Receive $1000 bonus by the time when he or she turns 18.
. Must save $25 per month.

18 - 6 = 12 years

$25 x 12 months x 12 years = $3,600.00

If you put $3600 into a CD for 3% interest rate for 12 years, you will get $1532 interest rate already.

$1532 - 1000 = $532.00

You have already lost $532.00

If you put $25 each month, the loss has not yet included your opportunity cost (time, energy, etc.) to make the deposit unless you use automatica deposit for 12 years into the same account months after months, years after years.

[ichaelm]

For anyone that wants to open a college savings account for their kids (in fact, you can even open one if you have no kids) and wants to receive a $25 bonus immediately, HERE is another option.

[SegaRob]

It is not worthy. Here is the financial analysis:

. Open an account before a child's 6th birthday.
. Receive $1000 bonus by the time when he or she turns 18.
. Must save $25 per month.

18 - 6 = 12 years

$25 x 12 months x 12 years = $3,600.00

If you put $3600 into a CD for 3% interest rate for 12 years, you will get $1532 interest rate already.

$1532 - 1000 = $532.00

You have already lost $532.00

If you put $25 each month, the loss has not yet included your opportunity cost (time, energy, etc.) to make the deposit unless you use automatica deposit for 12 years into the same account months after months, years after years.

That math is wrong because you don't put all the money in at the beginning. The balance is $0 (or $25) at the beginning and then $3600 at the end so the average balance is about $1800. The bonus $1000 plus interest but let's assume interest is 0%. The compounded annual return of $1000 on $1800 over 12 years is 3.75%. The best way to consider this deal is a $1800 CD locked in for 12 years at a rate of 3.75%. Not terrible, but I wouldn't lock my money for that long for that rate. Then again, it's not a lot of money to tie up.