How do I give a gift of money that will grow?

My niece is turning one and her parents are sick of all the toys that we purchase their children. I wanted to figure out another gift. I gave thier other daughter museum tickets to a kids museum but they have never used them. I was thinking of giving money in some way that will grow so that when she goes off to college or needs to buy a car that she will have the money then. What is a good investment that will grow for her?

I'd buy her some stock in an established, stable company that would mean something to her, like perhaps Disney. She'd grow up knowing she was one of the owners of the company!

I think you know the answer: a mutual fund.

Talk to Fidelity/Vanguard/T. Row Price/Schwab about how to attach the strings you are talking about (Uniform Gift to Minors Account).

A U.S. Treasury series I (that's a capital "i") savings bond will grow at the rate of inflation plus an additional amount. They can be purchased in various amounts through a bank. They will earn the specified interest rate plus the inflation rate (adjusted for inflation every 6 months) for 30 years. They can be cashed at any time after 5 years without penalty. Tax will be due when the bond is cashed.

You know apart from standard investment instruments there are educational funds that can gift stock to children tax free.
The children add money until they are 18 and the portfolio can be managed by a guardian, appointed by the gift-er. The money must be used towards educational expenses (tuition, books etc) before they turn 35 otherwise it goes to another child in the family. Its nice because its tax free growth. Its called a Coverdell ESA.
http://www.mfea.com/InvestmentStrategies...

You can also, in many states, pay the current price of tuition and assure the child will not have to pay increased, these plans are 529's
http://www.mfea.com/InvestmentStrategies...

Also know that gifted shares are taxed differently.
http://www.smartmoney.com/ask/index.cfm?...

In those detailed above, only the child at 18 can use it and for the top two only for education or education related expenses (a car for example to and from school transport does count)

Also most investment advisors say that the younger the child, the more agressive your portfolio can be, the older and closer to spending the funds, the more conservative your strategy should be. Good luck and I'm sure no matter what you gift, it will be much appreciated.

I've given my little nephew savings bonds before. They usually take 18 years to mature, and will increase in value for up to 30 years.

Also, each Christmas, I give him a Proof Set from the U.S. mint. As time passes, collectors are often willing to pay more an more for them.

Open a brokerage account at Zecco and buy her a few shares in Toyota, HP and Apple (She will need a car, a computer and an Ipod in the future)

Yes, it is maybe a good idea. But can you sure the parents will save the money for the kids until they grow up.