NEW YORK (CNN/Money) - How should I invest the money I'm putting into an Education Savings Account for my five-month-old child?

-- Romina, Sacramento, CA

First, let me say that I am in complete awe at your foresightedness in preparing for this future obligation. If I wore a hat, I would take it off to you. Most people probably don't even think about saving for their rug rats' college tuition until their kids are in junior high or high school -- and even then many don't actually do anything about it.  

And while starting a college fund late is better than not starting one at all, getting an early start on college savings has some major advantages, the biggest of which is that the money you put away in those early years while your child is an infant or toddler has plenty of years to grow and enjoy the wonders of compounded returns. The result is that the earlier you start, the less you have to save each month or each year to accumulate a fund large enough to meet tuition costs many years from now. And by investing through an Education Savings Account (formerly known as an Education IRA), you also get a pretty nifty tax break.

Depending on your income, you can contribute up to $2,000 this year to such an account. While your contribution isn't tax deductible, all withdrawals from the account are free of taxes, provided you use the money for qualified elementary, high school or college education expenses. (By the way, you might also want to consider investing in a 529 plan, another type of tax-advantaged college savings program. For details on the pros and cons of these plans, click here and for a comparison of Educations Savings Accounts and 529 plans, click here.

Okay, enough compliments. Let's get to some details on how you should be investing this dough you're socking away. Unless your child is some sort of prodigy who will be attending college at the age of three, then we're talking a long-term investing horizon here, something on the order of 18 to 21 years. To me, that means you should be putting the bulk of your college fund in stocks or stock mutual funds. Yes, stocks can have some rocky periods, as we've seen the past two years. In fact, even after rebounding from its lows last September, the stock market was still a good 25 percent or so below its peak in early 2000.

But since you won't need that college fund money for many years, you can afford to overlook these periodic setbacks, however painful they may be when they occur. And the reason you can do that is because over very long periods stocks clearly have offered far higher returns than alternatives such as bonds and Treasury bills. In fact, if you exclude periods including the Crash of 1929, there has never been a 20-year span during which stocks have not outperformed bonds and Treasury bills -- and often stocks have posted an edge of five percentage points or more each year over the 20 years.

So I don't think there's any doubt that you should have most of your child's college fund in stocks or stock funds. Which leaves two questions: how much should be in stock funds -- since you don't appear to be a seasoned investor, I'm assuming you'll opt for fund over individual stocks -- and what type of stock funds should you own.  

As to the first question, some advisers might argue that since your investing horizon is so long, you should go 100 percent stocks. After all, if stocks have the best long-term record, why put any money into the also rans? Well, I disagree with that view for a few reasons. One is that there's no guarantee stocks will repeat as winners or, even if they do, that they'll enjoy the same margin of victory. So if for no other reason than hedging your bets, I think it makes sense to invest a bit of your college fund in bond funds.

The other reason I don't like the all-stocks approach is that it doesn't take into account how people might react when stocks get creamed. Sure, it's fine to say you're a long-term investor who won't be fazed by market meltdowns. But when you see the value of your portfolio decline 40 percent or more (as many investors did over the past two years), it's hard not to panic and sell (as many investors did over the past two years). And once you start the "I'll sell now and get back in later" game, you raise all sorts of problems, like when do you sell and when do you get back in. I think you're better off creating a mix of stocks and bonds you can live with through all sorts of markets and then sticking to it. For help in finding the right stocks-bonds proportions, I suggest you go to the Asset Allocator tool on the CNN/Money website. For mutual funds, try looking at the Money 100, Money Magazine's editors and fund writers' annual list of outstanding funds.

As for what types of stock and bond funds you should own, the idea there is to own a variety of funds so that you have a broadly diversified portfolio that includes, in the case of stocks, both large and small and growth and value shares. In the bond sector of your portfolio, I think it's simpler just to stick with funds that invest in intermediate-term bonds -- that is, bonds that mature in four to ten years. There are plenty of ways to create a workable mix of funds -- I think the easiest is to use index funds that replicate the overall stock market or specific portions of it -- but the Asset Allocator will offer some specific fund suggestions that can get you started.

So it looks to me as if you're off to a good start. Now all you've got to do is continue socking that money away each year, and hope that when your child finishes high school that he or she agrees with your college plans.