By Jenny Wilson, Financial Advisor, Central Investment, Inc.
Let’s face it … coming up with the money to pay for college is not easy. The cost of tuition, room and board, books, etc. goes up every year and as a parent you wonder how in the world will you be able to afford it. Well, I have some information that will help make that job a lot easier.
Obviously, the earlier you start saving for your child’s higher education, the better. And one of the best ways to do that is to open a 529 plan.
A 529 is an investment account that allows you to earn money – tax-advantaged – to help pay for college. You simply open an account and make regular contributions to it over time. Any growth in the account based on how well your investment plan does is tax-free, if certain conditions are met.
Anyone can open a 529 at any time. So, whether you open one the day your child is born or do it several years later, you could have a nice nest egg by the time he or she graduates high school. The amount you invest along with your investment performance will determine how much money will be available when you need it.
You’ll need a provider to open a 529 account. And opening an account generally does not require a large initial investment. Contributions to the plan can be made as often as you like. And here’s a nice tip: anyone can donate to the plan (maybe you can get grandma and grandpa to add some to the kitty as a birthday present every year).
Of course, knowing how much to invest in a 529 is different for every family. I suggest doing an Internet search for college-savings calculators. That’ll give you a good idea how much money you’ll need when your child is ready to start college, whether it’s an in-state school, an out-of-state school, a private school or a public school.
We all want what’s best for our children, and saving for their education is at the top of that list. I don’t want my children to worry about paying off large student loans or wondering if they can even afford to go to college. So, starting to save as early as you can and contributing as much as you can, even if it’s only the minimum amount each month, makes a big difference. It’s a good idea to set up a direct deposit, so the money comes out of your paycheck and goes into the 529 automatically.
If you don’t have a financial advisor, I’m happy to help you learn more about a 529 plan. You can email me at jennifer.wilson@raymondjames.com or call toll-free 800-637-6884.
Getting started now will make it easier for you to help your child have a financially confident future.
Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. This information is not intended as a solicitation or an offer to buy or sell any security referred to herein. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Investing involves risk and investors may incur a profit or a loss. Past performance is not a guarantee of future results. Any opinions are those of Jenny Wilson and not necessarily those of RJFS or Raymond James. Expressions of opinion are as of this date and are subject to change without notice. As with other investments, there are generally fees and expenses associated with participation in a 529 plan. There is also a risk that these plans may lose money or not perform well enough to cover college costs as anticipated. Most states offer their own 529 programs, which may provide advantages and benefits exclusively for their residents. Investors should consider, before investing, whether the investor’s or the designated beneficiary’s home state offers any tax or other benefits that are only available for investment in such state’s 529 college savings plan. Such benefits include financial aid, scholarship funds, and protection from creditors. The tax implications can vary significantly from state to state.
Investors should carefully consider the investment objectives, risks, charges and expenses associated with 529 plans before investing. This and other information about 529 plans is available in the issuer’s official statement and should be read carefully before investing. Investors should consult a tax advisor about any state tax consequences of an investment in a 529 plan.
