What Are The Best Options For Investing For College?

What are the best options for investing for college? Save for retirement first, before college because there are alot of programs to take advantage of as a student, and none for a retiree. Even though I...

Even though I manage the business that offers and encourages various tax advantage college savings products, my first bit of advice that financial planners would make sure you fully fund your saving for retirement before you start putting money away for college. There is an emotional part of people that often times they would not want to do that, but from a pure analytical financial planning standpoint, if you are saving for college and as a result you are not fully funding your retirement opportunities. You are not being sort of financially optimal. To describe that in simple terms, there are an extraordinary ways of both grant and loan programs available for college educations, usually at very favorable rates that you are the student can take advantage of, but there are not a lot of programs that you or your spouse can take advantage of if you want to borrow for retirement. So, step 1 is make sure you fully fund your retirement savings. Once you get beyond that I had encouraged people to look at the several programs that are available to reduce the costs, if you will of particularly from a taxation standpoint of saving for college. There are a couple investment options that are much more attractive than what was available a decade or two ago. Mainly, their main theme, the control of the assets in the whelm of the parent or grandparent and yet they let you make contributions and have both tax deferred growth, so you are not paying taxes on earnings on your investment and at least until December 31, 2010, allow you to take funds outs of these accounts, free of all taxes, usually at both the state and the federal level. The two programs I am taking about, one is called the Coverdale Education Savings Account and the other is called the 529 College Savings Plan. Both of them have really good sort of taxation standpoint. You do invest in those with after tax dollars just as you were in the savings account, but your earnings grow tax deferred and you can withdraw funds for college expenses, free of taxes as legislation's currently written at least till December 31, 2010 and there are bills and canvas right now to make that taxes option permanent. And experts I have talked to suggest there is 50-50 chances of those bills passing this year. The advantages of these accounts are you are the account owner get to choose the investment trace and you get to determine when and how the money is used for the benefit of the beneficiary and if disaster strikes or you need the funds or you discover that either the beneficiary nor any other relative is likely to need the funds for college, you can withdraw them by paying income taxes on those funds, mostly penalty tax like taking money out of an IRI.

The 529 plans are really flexible, for example, if the child gets a scholarship, you can take the money and just pay taxes on it or you can keep the money in these accounts and they can be used further on down the line for graduate school. I guess I should say three things, the money in the account for the given students, secondly you can change the beneficiary as the account owner to any relation to the current beneficiary that would include cousins, uncles, aunts, parents, children, and neither of those incurs any tax costs or you can take thee funds out and pay normal income taxes on them.

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