The money you put into a 529 plan can only be used for higher education. For example college. I think in some states you might be able to use it for private high school as well. If it’s taken out and used for something else you will be hit with penalty fees and taxes. Index and etf funds you set up in a brokerage account like vanguard, fidelity etc. Being your daughter is a minor i think it’s set up as a custodial account in your name. The money is taxed when you withdraw it if there are gains. I am by no means an expert. Do a quick google search and you can get a lot more information. If the money is left for a long period of time you should do better in an index fund than in a savings account, however it will fluctuate and could be scary if your looking at it every day Most 529 plans are invested in funds as well, so again it fluctuates.