I know you said savings bonds, I would probably buy US I-Bonds. You can buy them directly from the treasurydirect.gov There are not costs to own them, and they are inflation adjusted. They can grow for up to 30 years. They are
not subject to state income tax, and if they are used for qualifying educational expenses (like college) they grow federal tax free. Also unless the government collapses, they are as safe as you can get.
I would just set up three accounts for your kids, and then you can keep buying them savings bonds every year. You can only purchase $5000 per social per year. An odd way around the $5000 limit is to buy $5000 in paper format at a bank branch and convert it to the electric account upon receipt and then $5000 in electronic format--so you can buy $10,000 per year per social security number. The other nice thing about the bonds is you can purchase amounts as little as $50. So this is truly an investment format that can work, no matter how small your budget. If you only have an extra $50 three times a year, you can still make the investments and you pay no fees.
I have been buying them with my extra money for the past 7 or 8 years. When I first started my husband made fun of me, that I was an old lady. I really only understand tangible assets and individual stocks of companies with tangible assets. (In his younger days he was an equities trader so is far more risky than me). Fast forward too many crazy turns in the stock market, and he too buys his limit every year. When he asked me how to set up an account, I nearly fell out of my chair. Since I have some that are older, mixed with some that are newer I probably get a blended return around 6%. He missed out on some of the better rate years and gets around 4%. In this market, guaranteed 4 or 6% is fine with us--plus it is only a small part of our retirement funds.
I refer to the bonds as our "end of the world" money. If everything else bottoms out, we still have this cash. We are due with our first baby in April, and she will be getting her own treasury direct account.
If you do decide to set up 529 plans, since it sounds like you have a lump sum of money now for each kid. I would make sure you spread the investment over some time. If for example, this is the height of the market for a while, you don't want to invest everything now in one lump. If you are dollar cost averaging, it is okay to buy stock or funds at an "expensive" time; but if the market drops 20% the week after you buy all their shares in the 529, it will be a long road before you see any return. At the same time it could go up 20%, that's pretty much the reason the market (even with mutual funds) drives me nuts.
If the mutual fund is an aggregate of companies and today it's value is X, how can it be worth X-20% tomorrow??? I get it when a sector fails, or an industry is obsolete, when invested in foreign governments and their currency wobbles or they become less stable, but for the radical price changes with no real reason--bah! Makes me feel like an individual investor can't get a fair shake, because of the preferred pricing for all the institutional investors. Drives me batty--only because we have so many assets invested in the market.
That was a really long way of saying, I'd buy I-bonds.
