Set up a bank account in her name. Start with just taking 4% of your net income into the account. Once you reach $2000, take one thousand, and start investing it with the lump sum, and then put your contributions towards that investment. Stick with funds, as you will be low risk but wishing to have higher gains than bonds. Any birthday funds, etc, that she receives, place in the bank account as that's her money that she received at the time until it reaches $3000, then take a grand into the funds again (so you are left at @2k. You will want to keep her liquid cash to about $2000 dollars as valued in 2008 (so you are tring to put in cash for inflation) so when she is 16 she can begin on her own with some responsibilities. But the investment money is there for when she plans to go to school.
I'm not sure where you live as well, but in Canada, we have a registered education savings plan. There is probably some tax shelter on earnings from educational investments in your country as well that you should definitely leverage.
Best of luck.