CNBC's Jim Cramer said he thinks investors should start saving for their children as soon as they're born, whether it's index funds, individual stocks or both.
For a newborn, Cramer recommended parents set up a Uniform Gifts to Minors Act account, or UGMA.
"When a child is born, think about setting up a Uniform Gifts to Minors account, and put index funds or individual stocks in there," Cramer said.
Cramer noted that rules for these accounts can vary by state and mentioned one caveat: UGMAs may affect the amount of financial aid a child receives should they decide to go to college.
If investors choose to buy individual stocks for their children, Cramer suggested ones with high dividends and high-quality growth stocks they believe might lead to big gains in the long haul.
Persons:
CNBC's Jim Cramer, Cramer