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Saving For College

October 8th, 2009 at 02:47 pm

1. Pay yourself first
Saving for your own retirement is more important than saving for college. Your children will have ways to raise money for college other then from you as for your retirement you only have yourself.
2. Start Early
Even small savings can add up if you give them enough time to grow. Investing just $100 a month for 18 years will yield $48,000, assuming an 8% average annual return.
3. Stocks are best for your college savings portfolio
Tuition costs rising faster than inflation, a portfolio leaning toward stocks is the best way to build savings in the long term. As the time to use this money approaches you can shift the portfolio towards more bonds and cash.
4. You dont have to save the whole amount of tuition
There are federal, state, and private grants and loans that help make up the rest.
5. With mutual funds, investing for college is simple
Investing in mutual funds puts a professional in charge of your savings so that you don't have to watch the markets daily.
6. Tax break benefits
There is a wide range of benefits from the Hope Credit and Lifetime Learning Credit or if your income is too high to qualify for those credits, you may qualify for a higher education expense deduction that will be in effect through 2009 and is extended periodically.

2 Responses to “Saving For College”

  1. NJDebbie Says:

    I agree with you regarding saving for retirement as opposed to saving for college tuition.

  2. Jerry Says:

    Tip #1 really got my attention. I'm now getting my graduate degree, and while I want to save a ton of money that will lead toward my daughter's eventual college education, I also know that I made it through undergrad with very little help from my parents (it just wasn't there to give). I think that the best insurance of finishing college it being determined to make it through, and to be creative in finding ways to make it happen. It also doesn't hurt to be really good at sports or the arts... =)

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