We all want what’s best for our children, but many of us are confused about the best way to set them up for the future.

Saving for college can be an intimidating task. But the good news is that you have options and the key is to start saving as early as possible.

Savings Accounts: This is perhaps the most familiar option for most Americans. The upside is that you may be more likely to save in a way that makes sense to you. The downside is that interest on savings accounts is pretty insignificant and may not help you reach your goal. Plus, these accounts are easy to access and could tempt you if you get in a tight spot.

Certificates of Deposit (CDs): Most CDs last for a period of one to five years and typically come with interest rates slightly higher than those for savings accounts. Still, the interest likely won’t be significant enough to greatly increase your savings. Plus, if you withdraw money early, you could be penalized significantly.

Stocks: As we all know, the stock market is a risky game to play. But, if you’re investing for the long term, it could be the way to go. If the company you invest in succeeds, you could multiply your initial investment and even sell your shares at a profit. If it fails, though, you could be faced with a loss of your initial funds.

Bonds: These are considered slightly safer than stocks; if a company fails, it’s required to pay off its bonds before it pays off its stocks. They function by setting up a contract: you’ll get paid back your initial investment plus interest at some future time (ranging from a few months to a few years).

Mutual Funds: These are professionally managed investments. You’ll be responsible for taxes and certain fees, but you can discuss with your manager a level of risk that you’re comfortable with.

State Sponsored Investment Plans: Many states have savings accounts with various terms and conditions designed specifically for parents saving for college. Visit your state’s Web site to learn more.

Education IRAs: Individual Retirement Accounts for education allow parents to contribute money each year for the education of kids’ younger than 18. If the money is used for education-related costs, it will be tax-free.

Talk with a Professional

If you already work with a professional accountant or investor, consult with him or her before proceeding.

Even if you hit financial hard times later and have to file bankruptcy, in some cases, your education savings may be protected. Saving a little is better than saving nothing at all, so get started with whatever you can afford!

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