Don't invest in eBonds; you are almost paying to invest in them! An ESA inside a good growth stock mutual fund is a good idea though.
QUESTION: A listener asks Dave if eBonds are the best way to invest for his grandchildren.
ANSWER: EBonds don’t pay anything – you’re almost paying them to invest.
I would suggest opening an ESA (education savings account) for as little as a $250 lump sum. An ESA inside a good growth stock mutual fund will grow your money at a much better rate. After you’ve set up the ESA, you can put $50 in each year. This money has to be used for college though, or else you’ll have to pay penalties and taxes.