1chemistdown

Why is it worse?

I’m sorry for being pendantic, but it’s Koch brothers. They really are the worst of the bunch; although, Elon be trying hard these days.

Prior to financing college education for your children, you need to make sure you have no high interest rate debts. So, all credit card statements are completely paid off monthly, no high interest personal loans, etc. Then you need to make sure you are paying all bills on time, that you are properly saving for old age (you need more money than you think), and then you are saving for upcoming expenses (do you have an old car? Are you saving for repairs and replacement, etc.?). After all your required monthly expenses are met and your savings for retirement and near future are met, then you can consider saving for children’s education.

So, you’re ready to put money into a college account. First, does your state have a good system out of 529 and a great state school? Some states have college savings plans for their school system that are hard to beat. If they do, you should seriously consider that plan over a 529. Many states will have better tax savings for their plans than a 529, etc. You really need to sit down and look at that stuff. Do the math and compare. If you still decide that the 529 is best for your situation, look at the various 529 plans available and what tax benefits are best for the state you live in, and compare that to the investment opportunities available and their expenses (ER, front load, back load, %fee, etc.). Once you’ve covered all of that, if you have a plan that you want to invest in then you need to save up for their minimum (unless they have no minimum balance), and then you put that money into the plan. Once the money is in the plan, make sure to go into the plan and invest that money into one of the investment options. If you do not know which invest is best, look for a target date fund that is targeted for the year that your child would go to college. Some 529s just have a questionnaire finding out your risk aversion, and then they will put the money into a 529 portfolio that agrees with your risk profile and then they adjust that towards lower risk investments as you get closer.

If you are sitting on a pile of cash for this, and still do not know what to do, please put that into an online high interest rate savings account. If you have a personal brokerage account outside of a retirement savings area, you can see what short term interest CDs you can get. I’m able