Looking into this and am trying to do my homework. Options would be to invest normally and pull out the money when the time comes or to put money into a college fund such as college fund 59 I believe, which guarantees your child's tuition when the time comes. As you see, I'm not real educated on this topic and could use some help. Of course I will be using a professional to handle my money but I don't want to go into this blindly. Any info would be greatly appreciated.
Investing for Child's college educ.
- Thread starter Gatorbait
- Start date
:brows:.............crossed my mind a million times 
.............ya wanna be one of my girl's sponsor? .............
.............ya wanna be one of my girl's sponsor? .............time is on your side
time is on your side
Gatorbait I live in Canada so I do not have enough knowledge to speak about the educational plans in the US. The are a few things you can do, there are many pages about these plans on the internet.
at google just key in prepaid guaranteed college plan (then the state you live in; and you should get quite a few helpful web pages, I tried this for a few minutes and most of the pages have quite a bit of information.
whatever you decide I would set up a plan for your child that holds stocks, by itself. I would look at DRIP and SPP stocks, these are stocks in which the dividends are reinvested and you can buy more shares without a commission. This is ideal for dollar cost averaging and creating a stock portfolio for only $100 a month or even less.
as for the plan when you see you financial advisor I would ask the following questions (by the way many people I know just shrug their shoulders when I ask them about the plan they invested in.)
These are basic questions (never a stupid question)
1. Who guarantees the plan (what form of government.)
2. what does the plan invest in (I find most invest in mid to long term bonds, obviously investment grade bonds)
3. What is the likely return on the money I put into the plan.
4. Are there any other plans; different, benefits and disadvantages of each plan.
5. What are the tax implications. (that one is big in Canada)
6. What happens if the child does not go to College ( okay the child will go to school but in some places they start training a child for a trade, so it is not a four year program maybe one or two. (note: there is a shortage of skilled trades this will only get worse in the future.) What happens to the money.
7. Is the child limited to where he/she can go to school
see stupid questions, finally do not sign on the dotted line in the first meeting. I find it is better to ask all of the questions you have and get reading material describing the plan(s). then read the information if you have more questions ask them, do not be in a hurry and know what you are getting into. In a few weeks or even a month the world will not end.
If you do buy into a plan I would still set up an account for a child, of stocks (DRIP/SPP) you can take of this yourself. Then you can see how you do, very little you need to build it up. Many people I know invest in Canada Savings Bonds for their children; they make less than 2.5%. Barely keeps up with inflation, what is the point. Stocks should be able to make 8%-12%, when the good and the bad years are figured in.
Here is an article from Moneyinvestor proves my point: later will have some stocks and some places that have these plans and you can ask them questions, they would know more than me.
Kids Time is on your side
The aspect of investing and DRIPs that we hear the most about is the impressive growth that is available to those who start early. By investing a couple of thousand dollars for a handful of years, parents or grandparents can fund a college education or plant a million dollar portfolio by the time a youngster retires.
Kids have a great advantage when it comes to investing- time. A child who invests a total of $50 a month from the time he or she is eight years old until she/he reaches 13 (six years total of $3000) - and then never invests another cent - will end up with more at age 65 ($1,302,154) than someone who starts investing at age 26 and invests $2000 every year until she/he retires 39 years later (assuming an 11% return on investments, the stock markets historical return since 1926).
A drip portfolio would be an ideal way to help the kids in your life get started. Heres a diversified group of companies that may be familiar to a child to own.
note: They listed 15 stocks most of which I think are overvalued, so I will come up with some stocks that offer this feature, and then list there list.
thanks
selkirk
time is on your side
Gatorbait I live in Canada so I do not have enough knowledge to speak about the educational plans in the US. The are a few things you can do, there are many pages about these plans on the internet.
at google just key in prepaid guaranteed college plan (then the state you live in; and you should get quite a few helpful web pages, I tried this for a few minutes and most of the pages have quite a bit of information.
whatever you decide I would set up a plan for your child that holds stocks, by itself. I would look at DRIP and SPP stocks, these are stocks in which the dividends are reinvested and you can buy more shares without a commission. This is ideal for dollar cost averaging and creating a stock portfolio for only $100 a month or even less.
as for the plan when you see you financial advisor I would ask the following questions (by the way many people I know just shrug their shoulders when I ask them about the plan they invested in.)
These are basic questions (never a stupid question)
1. Who guarantees the plan (what form of government.)
2. what does the plan invest in (I find most invest in mid to long term bonds, obviously investment grade bonds)
3. What is the likely return on the money I put into the plan.
4. Are there any other plans; different, benefits and disadvantages of each plan.
5. What are the tax implications. (that one is big in Canada)
6. What happens if the child does not go to College ( okay the child will go to school but in some places they start training a child for a trade, so it is not a four year program maybe one or two. (note: there is a shortage of skilled trades this will only get worse in the future.) What happens to the money.
7. Is the child limited to where he/she can go to school
see stupid questions, finally do not sign on the dotted line in the first meeting. I find it is better to ask all of the questions you have and get reading material describing the plan(s). then read the information if you have more questions ask them, do not be in a hurry and know what you are getting into. In a few weeks or even a month the world will not end.
If you do buy into a plan I would still set up an account for a child, of stocks (DRIP/SPP) you can take of this yourself. Then you can see how you do, very little you need to build it up. Many people I know invest in Canada Savings Bonds for their children; they make less than 2.5%. Barely keeps up with inflation, what is the point. Stocks should be able to make 8%-12%, when the good and the bad years are figured in.
Here is an article from Moneyinvestor proves my point: later will have some stocks and some places that have these plans and you can ask them questions, they would know more than me.
Kids Time is on your side
The aspect of investing and DRIPs that we hear the most about is the impressive growth that is available to those who start early. By investing a couple of thousand dollars for a handful of years, parents or grandparents can fund a college education or plant a million dollar portfolio by the time a youngster retires.
Kids have a great advantage when it comes to investing- time. A child who invests a total of $50 a month from the time he or she is eight years old until she/he reaches 13 (six years total of $3000) - and then never invests another cent - will end up with more at age 65 ($1,302,154) than someone who starts investing at age 26 and invests $2000 every year until she/he retires 39 years later (assuming an 11% return on investments, the stock markets historical return since 1926).
A drip portfolio would be an ideal way to help the kids in your life get started. Heres a diversified group of companies that may be familiar to a child to own.
note: They listed 15 stocks most of which I think are overvalued, so I will come up with some stocks that offer this feature, and then list there list.
thanks
selkirk
