I put away money every month to give to my child when they turn 18. I opened a CD account with two years' worth, but is there a better way to grow this money?

CDs typically, although not always, provide higher yields than even high-yield savings accounts. While the interest rate is locked in for the duration of the CD term, and you can't withdraw the funds during the term without a penalty, you have several years before you need to give the money to your son.

However, while CDs are a solid choice in the right circumstances, other investments offer more growth potential if you have a long time horizon. Here are a few things to consider to maximize the funds you can give your child once they reach adulthood.

Options for investing

If you are saving for college for your child, the best place for the money would likely be a 529 plan, as these tax-advantaged accounts are earmarked for education.

Your funds grow tax-free, you don’t have to pay taxes on withdrawals as long as they’re for qualifying expenses and the majority of states offer tax deductions or tax credits for contributions.

However, if you already have a 529 and this is money meant for other things, then a brokerage account could be a good place for it.

One option is to open a custodial brokerage account, which has no income or contribution limits and withdrawals can be made at any time without penalties as long as the money is used for the benefit of the child.

You'll be in control of the investments now, and, depending on your state, the funds can be transferred to your child between the ages of 18 and 25. Friends and family can also contribute, and a portion of the earnings may be exempt from federal tax.

Once you've opened the custodial account, you'll have access to a wide range of investment options, such as individual stocks, exchange-traded funds (ETFs), mutual funds and bonds.

For many investors, a broad market index fund will be the best option, as it offers low fees and instant diversification. For example, an S&P 500 ETF tracks the performance of the 500 largest U.S. companies and is widely considered to reflect the performance of the market as a whole.

You can set up automatic investments into the fund each month as you contribute, and the growth will be effortless.

Of course, there is some risk when investing, and over time, your investment will rise and fall. However, because you won’t need this money for several years, you have the time to ride out fluctuations in the market and historically the market has always recovered and reached new heights.

The S&P has produced an average annual return of around 10% since its inception in 1957, so you should earn more than you would in a CD, and much more than you'd earn if you just kept the money in a regular savings account.

Of course, it’s critical that you review your investment objectives at least annually and rebalance your portfolio if your risk tolerance changes. And you might not want to invest the entire portfolio in equities.