Most people agree that an investment in a college education is money well spent. But finding the money to pay for education costs takes careful planning. A sound investment strategy, coupled with knowledge of other college financing options, may help put your children on the road to a valuable college degree.
It’s best to start investing early and often for college. First, figure out how much you will need to save for each child based on his or her age. Then, develop an investment plan and stick with it. For longer time horizons (over 12 years), consider investing the majority of your college saving assets in stocks and stock mutual funds, as these investments may offer the greatest long-term growth potential. With shorter time horizons, you may want to add or increase a fixed-income element to your portfolio to potentially balance risk.
You should also consider other financing options. Encourage savings gifts from friends and relatives such as Series EE Savings Bonds or mutual fund shares. Consider opening a 529 plan account or a Coverdell account for each child. Both of these provide tax-advantaged solutions.
For more detailed information, see our education goal page.
1 Diversification does not assure a profit or protect against a loss.
GE 91145 (01/2016)