Q: I'm 35 years old with a young family. A large amount of EE bonds ($16,000) from my grandfather has now matured. We are not in dire need of the cash right now and I'm wondering about simple-yet-smart ways this money could benefit us.


A: I consulted Patrick Zumbusch, founder of Wellspring Financial Partners in Tucson, Ariz., about your situation.

We are assuming the interest rate on your home mortgage is reasonable, say, 5 percent or less. If that is the case, investing the money is better than lessening liabilities — two sides of the same coin, notes Zumbusch. (Since the bonds have matured, the income has been reported so you can expect to get a 1099-INT.) We both assume that educating your children is a priority. In that case, the top recommendation is investing the money in 529 college savings plans. Minnesota's College Savings Plan is a good choice, although you can open an account in other states if you want.

The 529 account is funded with after-tax dollars. The money grows tax-deferred. The kicker: Withdrawals are tax free so long as the money goes toward qualified educational expenses, such as tuition and books. The tax-free money can be used with any qualified postsecondary institution — public university, liberal arts college, community college, many foreign universities, vocational schools and so on. Your children don't have to get their postsecondary education in Minnesota.

You will want to be the "owner" of the plans. Your children are beneficiaries. The impact on the financial aid formula is minimal when parents are the owners. I would set up a plan for each child and divide the money evenly. Anyone can contribute to the accounts if they want, including family and friends. To simplify the investment choice in 529s, you could go with the "age-based" option. Invest the money and "let it run," said Zumbusch.

You could check out two resources for further research into 529 plans: Savingforcollege.com and collegesavings.org.

Putting money into a Roth is another good idea. You can put up to $5,500 into a Roth in 2018. For married joint filers the income threshold in 2018 starts phasing out at $189,000 until $199,000. A Roth is funded with after-tax dollars and withdrawals are tax-free during retirement. Put the bulk of the money into stocks, preferably broad-based, low-cost index funds. This way you'll do "better than 80 percent of all investors in more expensive actively managed funds," said Zumbusch.

Chris Farrell is a senior economics contributor at "Marketplace" and commentator, Minnesota Public Radio.