Investment ideas for kids college

[srp49ers]

Needed some advice on investment options, for my niece. Something that will mature when
she is 18 for college. She is 4 right now.

They are looking to invest about 300-400 per month.

 

[vi edit]

529 plan through vanguard (look at college Iowa)
But check and see if your state has anything similar where you might get a tax deduction using their 529 plan.

One of the bonuses of the 529 plan is that you can put it in the parent's name so that the kid doesn't get dinged for it come FAFSA time. When kids have money in their name it's counted much harder than the parents. At at least that is what I've read and what I'm told

...I'm not an accountant, lawyer, CPA, or judge or play any of those on TV or the internet.

Savings bonds are a joke (EE) and other interest based (i-bonds) are at miserably low levels.

 

[Vic Vega]

...

 

[XX55XX]

Second the 529 plan.

With your timeframe, I would look at bonds. Some bond funds out there offer good yields with low management fees. Mix it up with equities if you like, but if you are conservative, fixed income is the way to go.

 

[the DRIZZLE]

There are big drawbacks to 529 plans. The money is counted against the kid for financial aid purposes. If you haven't maxed out your 401k, IRA, and Roth accounts it is better to put the money there first then do an early withdrawal.

 

[Printer Bandit]

There are big drawbacks to 529 plans. The money is counted against the kid for financial aid purposes. If you haven't maxed out your 401k, IRA, and Roth accounts it is better to put the money there first then do an early withdrawal.

Currently, financial aid eligibility isn't affected much by 529 plans (college savings plans or pre-paid tuition plans) because these plans are considered part of the parents' assets in the calculation of the Expected Family Contribution (EFC) toward college costs.

http://www.petersons.com/college-search/529-plan-pros-cons.aspx

 

[the DRIZZLE]

Currently, financial aid eligibility isn't affected much by 529 plans (college savings plans or pre-paid tuition plans) because these plans are considered part of the parents' assets in the calculation of the Expected Family Contribution (EFC) toward college costs.

http://www.petersons.com/college-search/529-plan-pros-cons.aspx

Interesting. My understanding was that the 529 counted as the kid's assets and was given a different weighting in the financial aid formulas than the parent's assets. According to your link that's not correct.

 

[Elbryn]

Interesting. My understanding was that the 529 counted as the kid's assets and was given a different weighting in the financial aid formulas than the parent's assets. According to your link that's not correct.

because it's not 529's only count some 5.x% towards the kids if the 529's are opened by the parents with the kids as the beneficiaries. if you wanted to kill that and have trustable parents, 529's under the grandparents count 0.

 

[highland145]

+1 529 except that we've lost our ASS with out state program.

My "solution",
k5-12, A's ( so far, 2-5th, straight A's)
SAT....as high as possible.
Helps that the boy takes after his Mom and he's in the best private school in the area. Pay now, hopefully, save later.

 

[Jumpem]

+1 529 except that we've lost our ASS with out state program.

My "solution",
k5-12, A's ( so far, 2-5th, straight A's)
SAT....as high as possible.
Helps that the boy takes after his Mom and he's in the best private school in the area. Pay now, hopefully, save later.

Do 529s have penalties of some sort if your kid goes to college out of state?

 

[Elbryn]

Do 529s have penalties of some sort if your kid goes to college out of state?

no, it's for anything education related. though sometimes there's pre paid schooling which does limit the location. i think most of those have gone by the wayside given the rapid growth of tuitions.

 

[Elbryn]

+1 529 except that we've lost our ASS with out state program.

My "solution",
k5-12, A's ( so far, 2-5th, straight A's)
SAT....as high as possible.
Helps that the boy takes after his Mom and he's in the best private school in the area. Pay now, hopefully, save later.

dont forget take as many ap classes and subsequent tests as possible. get that first year credit and that only leaves 3 more to go

 

[Engineer]

Kid gets job....
Kid helps pay for school...

Other than that, I don't have much because interest rates are so low and I just don't know what to invest in because we've been in a damn decade + slump. I have a savings account that I thought I was getting about 0.75% on but I just looked and it's at....drumroll......0.05% (yes, .0005 return on my investment PER YEAR). Hell, even if loaning at 1.49%, they are basically making 100% profit on that 1.49%. *sigh*

 

[the DRIZZLE]

because it's not 529's only count some 5.x% towards the kids if the 529's are opened by the parents with the kids as the beneficiaries. if you wanted to kill that and have trustable parents, 529's under the grandparents count 0.

Not the first time I've been wrong. In my defense I think in the past it did count against the student if the 529 was in the students name but it was changed a few years ago.