What ChatGPT Didn’t Tell Me

I’m a new mom, so naturally I can’t wait for my daughter to walk, talk, and start investing. OK, maybe that last one is just me since I write for Investopedia. But the sooner I start teaching her the value of compound interest, the better off she’ll be in 18 years.

Now, you may be thinking, “If she writes for Investopedia, why is she asking ChatGPT which accounts to open for her four-month-old daughter?” Well, ChatGPT may not always be right, but it may offer fresh perspectives. And when you’re just getting back to work after maternity leave and functioning on five hours of sleep a night, your brain doesn’t always work like it should. So, I consulted one of the hottest artificial intelligence (AI) bots on the market to see if its answers aligned with what I thought would be best for my daughter.

What Accounts Should I Open for My 4-Month-Old Daughter?

I asked ChatGPT to act as a finance expert and tell me what accounts to open for my daughter. Here’s the exact prompt I used:

You’re a finance expert. What bank and investment accounts should I open for my 4-month-old daughter so we can help her save money and invest for her future?

ChatGPT came back with the following list of accounts (verbatim):

A few of these are great recommendations for my daughter, while others may not be the right fit for her at this time. Plus, it missed one key financial account I’ve been hoping to open in 2025 and another new option that might make sense for my baby. More about that below.

Custodial Accounts

There are two types of custodial investment accounts:

I can open both types of custodial accounts through a brokerage firm to invest in stocks and other securities, and then transfer the earnings and investments to my daughter when she’s a legal adult (usually 18 to 25, but the age of majority differs by state). A custodial account will allow my daughter to use the money for anything she wants in the future, like college tuition, buying a house, or traveling. Plus, custodial accounts have no total contribution limits. The only downside is that we will pay taxes on the earnings, but luckily not until she earns more than $2,700 (the first $1,350 she earns is tax free, and the next $1,350 is taxed at her rate which is likely 0%).

529 Plan

I’m undecided about opening a 529 plan for my daughter. A 529 plan is an investment account that allows anyone to contribute, and the money can then be used for qualified education expenses such as books, tutoring, college tuition, and more. However, I’m not sure how much those things will actually cost us, and whether or not she’ll even want to go to college.

If I don’t use the money for qualified education expenses or college tuition, then I may be able to roll it over into a Roth IRA, but only up to $35,000. So the remaining money would go unused unless I transfer it to a qualified family member.

High-Yield Savings Account

Among all the accounts on ChapGPT’s list, a high-yield savings account (HYSA) offers the most flexibility in how you can use your money. High-yield savings accounts pay excellent interest rates—up to 5.00% APY—and allow you to withdraw the money when needed.

I can open the account in my daughter’s name, too. And since she’s in the 0% tax bracket, she’ll avoid paying taxes on her earnings. However, high-yield savings accounts for kids—the kind I can open in her name—often have a maximum balance for earning the highest rate (such as 10.38% APY only on balances up to $1,000). I will likely open a new HYSA in my name and just pay the taxes on it so that I can choose the account I want and save as much as I can for her future, without limits on the amount of funds that can earn the higher rate.

Roth IRA

ChatGPT suggested I open a Roth IRA for my daughter if and when she has earned income, like from a job. That’s the catch—you need earned income to fund a Roth IRA, and the vast majority of four-month-olds (with exceptions like baby models or actors) do not earn income, including my daughter. So I will be skipping this option for now.

Overall, Roth IRAs can be a great way to save for retirement and could benefit her in the long run thanks to the way a Roth account offers tax-free growth with after-tax dollars. But a Roth IRA is not necessary to get her finances started. If and when she starts working, I’ll look into opening a Roth IRA for her.

Savings Bonds

The last financial account ChatGPT recommended I open for my four-month-old is a savings bond or Series I bond. An I bond is a fixed-interest account with a rate that is based on the inflation trend from the prior six months. It’s designed to protect your money’s purchasing power from inflation. The rate has two parts: one is fixed for the life of the bond, and the other is indexed to inflation. The latter rate changes every May and November.

You buy an I bond through the Treasury Department. You can’t touch the money for the first year, and if you cash it in within the first five years, you’ll lose the last three months of interest.

Right now, new I bonds come with a rate of 4.03% for the first six months. That composite rate will change in a few months. Opening an I bond now can let me take advantage of a good rate, but it’s not much different from what I could earn with a CD or a savings account. Those accounts have the advantage of offering more flexible withdrawals, and are available at a wide variety of institutions.

So What Did ChatGPT Miss?

The accounts GPT suggested were all in line with what I was considering for my daughter to set her up for financial success. However, ChatGPT failed to mention a couple of other accounts.

CDs

One savings vehicle that’s been on my mind: a certificate of deposit (CD). CDs offer fixed interest rates for a period of time, like one or two years. With the best CD rates in 2025 still fetching over 4.20% on terms of 4 to 24 months, now would likely be a great time to deposit money in a CD for my daughter. Once the CD matures, I could roll it into another CD or move it to the high-yield savings account.

For example, let’s say I deposited $5,000 into a 6-month CD with a 4.60% APY back on Aug. 1. By Feb. 1, before my daughter turns one, I’d have over $113 in earnings. I could then take the $5,113 and move it to her HYSA, another CD, or even her brokerage account to continue growing her money.

Trump Account

Another account ChatGPT failed to mention—and potentially because it’s so new—is the new Trump account. I could open a Trump Account since my daughter was born in 2025, and the government would deposit $1,000 into it, completely free. After that, I could add my own $5,000 per year. The account would invest the money so that it tracks a stock index. If I let the account sit with just $6,000, and the stock index returned a conservative 5% annual return, by the time my daughter is 18, she’d have over $14,000. If I added $1,200 per year after the first year, she’d have over $45,448.

Of course, returns are never guaranteed with the stock market, so there’s a chance we could lose money, but it may be worth the risk since time and compound interest would be on our side with my daughter’s longer investing horizon. The downsides are that the money in the Trump account can only be used once my daughter reaches age 18, and it can only be used for a limited number of things, like buying a house, college tuition, or starting a business. A brokerage account could be a better move for flexibility.

The Bottom Line

With so many options, it’s hard to pick just a few accounts to get my daughter started. I plan to open a high-yield savings account, a custodial brokerage account and/or a Trump account, and a CD for my daughter. She’s only four months old, so I have a lot of time to let the compound interest work for her. In the future, I can always open a 529 plan, a Roth IRA, and an I bond if those options fit her circumstances at that time. What matters most is getting started so that she has a good financial foundation for when she becomes an adult with dreams of, say, going to college, owning a home, or something else. It’s the least I can do for my child.

How We Find the Best Savings and CD Rates

Every business day, Investopedia tracks the rate data of more than 200 banks and credit unions that offer CDs and savings accounts to customers nationwide and determines daily rankings of the top-paying accounts. To qualify for our lists, the institution must be federally insured (FDIC for banks, NCUA for credit unions), and the account’s minimum initial deposit must not exceed $25,000. It also cannot specify a maximum deposit amount that’s below $5,000.

Banks must be available in at least 40 states to qualify as nationally available. And while some credit unions require you to donate to a specific charity or association to become a member if you don’t meet other eligibility criteria (e.g., you don’t live in a certain area or work in a certain kind of job), we exclude credit unions whose donation requirement is $40 or more. For more about how we choose the best rates, read our full methodology.

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