Should I buy Savings bonds to save for my children’s college or should I invest in a couple 529 plans?
by admin ~ April 13th, 2007 . Filed under: Investing .
kelly asked:
I know NOTHING about this stuff.But am due with my twins soon and want to get started
Rolf Mcwells
I know NOTHING about this stuff.But am due with my twins soon and want to get started
Rolf Mcwells
April 16th, 2007 at 12:17 am
529 or an ESA. NOT savings bonds. They have a horrible rate of return.
Congrats on the twins!
April 18th, 2007 at 5:43 pm
Not Savings Bonds.
April 20th, 2007 at 6:33 pm
Do the 529s. Savings bonds don’t return as much.
April 24th, 2007 at 6:09 am
529’s. Not savings bonds.
Also, before saving for your kids education, make sure you are fully funding your retirement savings.
Kids can borrow money for education but you can’t borrow money for retirement.
April 27th, 2007 at 9:38 am
Not every child is the same, don’t lock your child’s money in a college fund that he are she may never use.
April 28th, 2007 at 10:09 am
I suggest you to open a brokerage account at Zecco and buy at least one share of Microsoft, Sony and Nintendo every week. (I am a Portfolio Manager)
April 30th, 2007 at 12:02 am
Neither.
Open an UGMA(Uniform Gift to Minors Act) at a low cost online brokerage account. Buy (and tell friends and family who want to buy gifts for your children) mutual funds on a regular basis. That way YOU control the funds, not the children. I know it’s hard to believe but SOME folks choose not to go to college, and some get control of their funds and spend it foolishly or give it to a charity you might not support.
You can always redirect the funds at your desire until the child turns 21.
You can even invest in tax free muni bonds if you are concerned about income taxes (make sure that your buy funds that affect your state).
Some brokerages that do this well include Charles Schwab, Ameritrade, ETrade Financial. Even better (but a little more expensive) is Fidelity Investments.
Good Luck
ED
May 1st, 2007 at 6:04 am
Before you do anything, how much do you plan to set aside a year?
If it is less than $4,000 this year, and $5,000 next few years, start a ROTH IRA funded with mutual funds. This way, if the kids decide not to go to college, you retain the funds, don’t pay a penalty for withdrawing the funds, and can use it for your retirement.
If it is more than $4,000, start with a ROTH, then fund a traditional IRA with mutual funds, which will give you up to $8,000/yr between the ROTH and Trad, then the remainder in a Coverdell or 529.
May 3rd, 2007 at 5:55 pm
Savings bond have a very low return, there are more efficient ways of saving for a college education.
One answer mentioned the UGMA and UTMA accounts and indicated that you retained control of the money - FALSE. These are irrevocable gifts. You can use the funds prior to the age of majority for the child’s well-being, but you must keep documentation.
The 529 plans give you great flexibility in the type of investment, the custodian (check out different state plans) and the beneficiary. If one of the twins qualifies for a full tuition scholarship - you can use all of the funds for the remaining twin.
The other concerns regarding retirement are valid and you might want to spend some time with a financial planner to determine if a 529, Coverdell or Pre-paid tuition is the best vehicle for your savings.
Best wishes for healthy and happy babies. Good Luck.