| College Planning |
| What is one of the greatest gifts you can impart to your children and/or grandchildren? |
| A better, brighter future. Funding a college education is often one of the most important financial investments you will make in your lifetime. |
| Unfortunately the rising cost of college has consistently outpaced overall inflation, increasing 5% annually over the past ten years. As this trend continues, you may find that you're not able to fully cover your child's or grandchild's education expenses through your regular savings or student financial aid programs. |
| In order to meet the cost of college, you need to clearly define your education goals and build a systematic college investment strategy into your overall financial plan. And it's never too early to start! It is far easier to start investing years in advance for a college education than it is when the first tuition payment is right around the corner. |
The Fundamentals of College Planning
How to get started!
|
 The Fundamentals of College Planning |
top  |
| When it comes to college planning, many people choose to use the advantages of both stocks and fixed income securities. Your portfolio mix of investments should generally depend upon the timeframe between your initial investment and the beginning of college. For a young child, a portfolio weighted more heavily in stocks historically yields the best returns over the long term. If the child is much older however, a more conservative approach with fixed income investments minimizes short-term investment risk and volatility. |
| To further offset rising college costs, consider taking advantage of a new crop of tax-advantaged investment accounts including 529 Plans, Coverdell Education Savings Accounts (ESA), and Uniform Gift/Transfers to minors. These accounts provide investors with a wide range of financial benefits and flexible investment options. |
| 529 Plans grow free from federal and state income taxes. Withdrawals are federally tax-free if used for qualified higher education expenses and depending on your state of residency, earnings may also be free from state taxes. 529 Plans have no income limitations for contributors, allow the investor to change beneficiaries once annualy and to control withdrawals. |
| Coverdell Education Savings Accounts (ESA) are tax-free if used for qualified education expenses, have adjusted gross income limitations, and allow the investor to change beneficiaries. Control of the withdrawals will transfer to the child when he/she becomes of legal age. |
| Uniform Gift/Transfer to Minor trust accounts are taxable, have no income limitations, and do not allow the investor to change beneficiaries. Control of the withdrawals will transfer to the child when he/she becomes of legal age. |
| How to get started! |
top |
| If you would like to get started on a systematic college savings plan, first you need to determine the type of institution you are interested in, likely enrollment date, and the projected costs of tuition, room and board. This should give you a good estimate of how much you will need to start investing in order to reach your education goals. Your Financial Advisor can then help you choose the best, most tax—advantaged investment vehicles for seamlessly building your college fund into your overall financial plan. |
College Planning