You have about as many investment choices in a Coverdell as you would in a personal IRA account. Money in a Coverdell ESA can be invested in financial instruments such as mutual funds.

You can establish a Coverdell ESA at any major brokerage or bank, and the investment choices will vary depending on the institution. The account will grow tax-deferred, and the withdrawals are not taxed as long as they are used for appropriate educational expenses.

Assets within the account can be rebalanced or reallocated as much as the custodian company will allow, unlike 529 plans which do not have to allow you to move investments more than once per year.

You can only contribute $2,000 a year to a Coverdell until the beneficiary is 18 years old. You can change the beneficiary once a year, but it has to be a qualifying family member.

What is the Federal Supplemental Education Opportunity Grant?
How Can I Use the Money From My Coverdell ESA?