If you redeem any bonds, you will have to pay federal taxes on earnings. If the bonds are still earning interest, retain them. If you want a conservative investment, cash all or some, and invest in Treasury I-bonds, now paying 6.49 percent interest. For a more aggressive investment, go with stock mutual funds. Whichever you choose, invest in the child's name to keep taxes lower, Pederson says.
Some online services charge even less.
If you use your father's money, for tax purposes be sure to specify that in the online-broker agreement, he says. We offer them for your additional research. The Christian Science Monitor. All rights reserved.