Saving for your child’s education is an important step for his/her future. With some smart financial maneuvers, you’ll be able to make your money grow, so that by the time high school graduation comes around, funds are available. As important as saving for college is, it’s critical to remember that you should not allocate your retirement savings for college expenses. Securing the funds for a college education is far easier than securing money to see you through retirement.
Start as soon as possible.
Saving now for college ensures that you have the most options available when the time comes. If you feel overwhelmed by such a large, looming expense, consider this: even modest investments can pack a punch. Whatever savings method you choose, it’s important to first do your homework. Consider your needs, objectives and personal financial situation before making your selection.
The Coverdell Savings Account functions similarly to Roth IRAs but, instead of retirement, is instead used for educational expenses. With a annual contribution cap of $2,000, earnings within the account grow tax-free and can be used for any educational expense – not just college tuition.
With tuition costs rising faster than inflation, a portfolio of stocks is a smart way to build savings in the long term. As your child nears the end of high school, you can protect your returns by switching the funds into bonds and cash.
Want to make college funds grow by investing? With a mutual fund, a professional is put in charge of your savings so that you don’t have to watch the market daily.
Texas Tomorrow Funds:
Chances are, you have plenty of time to save for your children’s’ or grandchildren’s’ education. After all, it could be 15 years or more until the money is needed. But have you factored in how much college will cost then? Tuition costs are skyrocketing, rising at a rate of approximately 6 percent a year. The truth is, time is on your side now. By getting a head start, you will be taking one of the most valuable steps to ensuring a good future for your child, grandchild or other loved one. For more information visit the Texas Tuition Promise Fund website.